The airline said that the agreement was presented to a Manhattan bankruptcy court that is handling its Chapter 11 bankruptcy case, which it filed for in May 2020 due to the impact of the COVID-19 pandemic on its operations.

The agreement includes bondholders in Chile, the Official Committee of Valista Creditors (UCC), the Ad Hoc group of LATAM creditors (led by Sixth Street, Strategic Value Partners and Sculptor Capital) and the main shareholders, the company said in a statement.

"The agreement will allow the creditors who choose to receive the Class A Convertible Bonds or the Class C Convertible Bonds contemplated in the Reorganization Plan, to improve their recovery through an additional cash payment," it said.

The firm had presented the plan, diluting shares, in November last year.

The hearing is scheduled for May 17 at which LATAM's lawyers will ask U.S. Bankruptcy Judge James Garrity to approve the proposal. The plan proposes an $8.19 billion infusion through a mix of new equity, convertible notes and debt.

(Report by Fabián Andrés Cambero; Writing by Alexander Villegas; Editing by Alison Williams)