The measure grants an automatic suspension of 180 days of the execution of the unpaid debts, and according to what was expressed in the statement, LATAM will use that time to renegotiate key contracts "adjusting them to current market conditions".
The Chile-based company said it has up to $900 million in financing from shareholders - including the Cueto and Amaro families and Qatar Airways - to support it during the bankruptcy process.
The company's affiliates in Chile, Peru, Colombia, Ecuador and the U.S. have joined in the bankruptcy filing, the company said today. Australia's second-largest carrier, Virgin Australia, sought bankruptcy in its home market last month.
Latam is not including its affiliates in Argentina, Brazil and Paraguay in the turnaround effort.
LATAM flew more than 74 million passengers to about 145 destinations and launched 26 new routes a year ago, when it raked in more than $10 billion in revenues, the company said.
Last month, the Chilean-Brazilian airline said it was scaling back its operations by 95 per cent in response to the global health crisis, which has hammered the world's travel and tourism sectors.
It came just two weeks after Latin America's second largest airline, Colombia's Avianca, also filed for bankruptcy in the USA to reorganize its debt "due to the unpredictable impact" of the pandemic.
The airline had more than 340 planes in its fleet and almost 42,000 employees on its payroll, according to its more recent annual report.
But unlike Avianca, which experienced management turmoil and losses, Chile's LATAM posted profits for four consecutive years totaling more than $700 million.
"This reorganization process provides LATAM with an opportunity to work with the group's creditors and other stakeholders to reduce its debt, access new sources of financing and continue operating, while enabling the group to transform its business to this new reality". It now has $1.3 billion on hand, it said.
LATAM's second-largest shareholder is American carrier Delta Air Lines, which paid about $1.9 billion for a 20 percent stake previous year. If negotiations are unsuccessful, LATAM acknowledged in its legal filing that its Brazil unit might file for bankruptcy as well.
He did not say whether Delta might provide further financial support, and the company declined to comment further.