LATAM Airlines Brasil (JJ, São Paulo Congonhas) and eight other entities, including LATAM Cargo Brasil (M3, São Paulo Viracopos), filed for US Chapter 11 protection on July 7 and July 9, 2020, blaming a lack of Brazilian government funding, the worsening epidemiological situation in the country, upcoming repayment obligations, as well as suppliers' lack of trust following parent firm ENT! LATA's own entry into bankruptcy protection.

Besides the passenger and the cargo airlines, the filing also concerns their Brazilian parent holding TAM S.A., Chilean intermediary parent Holdco I S.A., as well as Brazil-based units Prismah Fidelidade Ltda., Fidelidade Viagens e Turismo S.A., TP Franchising Ltda., Multiplus Corredora de Seguros Ltda., and Piquero Leasing Limited.

On July 9, the Brazilian units collectively applied to have their Chapter 11 proceedings linked to LATAM Group's ongoing restructuring, which filed for US Chapter 11 protection together with its units in Chile and all other countries except for Brazil on May 26, 2020.

"While the Debtors [i.e. LATAM Group] had hoped that the Subsequent Debtors [i.e. the Brazilian units] could continue to operate independently outside of the purview of this Court's protection, many contract counterparties and trade vendors have used the Chapter 11 filing of the Initial Debtors in order to restrict or impair trade terms, cease service, or otherwise impair the Subsequent Debtor's ability to continue to do business. Further, the Subsequent Debtors are also approaching a number of material obligations in respect of their financial indebtedness. Finally, while the Subsequent Debtors remain in discussions concerning potential government assistance in light of the pandemic, those discussions have, to date, not come to fruition," LATAM said in its petition.

Meanwhile, the Chilean parent company said in a stock market filing that it had secured the second tranche of its debtor-in-possession (DIP) financing from Oaktree Capital Management, amounting to USD1.3 billion. This tranche, subject to court approval, would complement USD900 million already pledged by shareholders Qatar Airways Group and the Amaro and Cueto families. The previous tranche would also include an upsize of USD250 million, allowing any other Chilean shareholders to participate.

"Combined, [the two tranches] meet LATAM's financing requirements in the context of the COVID-19 crisis and, as a result, it is hoped that financial support will not be required from governments. Nonetheless, LATAM Airlines Brasil will continue advancing negotiations with Brazil's National Bank for Economic and Social Development (BNDES)," the group said.