WASHINGTON, Dec. 5  -- Participants in a bailout hearing Friday debated whether the Big Three U. S. automakers should seek bankruptcy protection before accepting federal aid.

Edward Altman, a New York University finance professor, advocated Chapter 11 bankruptcy protection for General Motors Corp., arguing before the House Financial Services Committee that the troubled automaker would not survive unless it became a debtor in protection.

"The benefits afforded to firms whose assets are protected and whose fixed payments on most liabilities are suspended while reorganizing under Chapter 11 (are) quite clear," Altman said. "And another sometimes overlooked enormous benefit of a firm in bankruptcy is that they are entitled to what is called debtor-in-possession loans, which gives the lender -- in this case, the U. S. government, as I'm advocating -- a super-priority status over all other creditors."

Representatives discussed whether providing $34 billion to the U. S. automakers is a good idea. Chief executives from Ford Motor Co., General Motors and Chrysler LLC were on Capitol Hill for a second round of hearings on their request for government aid. They had testified Thursday before the U. S. Senate Banking Committee.

Jeffrey Sachs, Earth Institute director at Columbia University, argued against the automakers seeking Chapter 11 bankruptcy protection, saying such a move presented the "possibility of a cascading disaster."

Sachs said he believed automakers' business plans could be reorganized without bankruptcy protection through a strong oversight entity on matters such as their business models, balance sheets and finances.

Sachs also suggested three sources for financing a potential automaker bailout: loans through the Federal Reserve, using some of the bailout money approved for the financial markets and funding already approved for the automakers to improve fuel efficiency. (UPI)