The airline, which has about $1.3 billion of cash on hand, recently approved a dividend payment, in contrast to other carriers that have halted such payouts amid the crisis.
Latin American governments, many under severe budget constraints themselves, have proven reluctant to bail out their key airlines, in contrast to the United States and Europe.
Still, Chilean Finance Minister Ignacio Briones said on Tuesday he was considering potential help for large companies amid the coronavirus outbreak, including a bill to be proposed next week offering unspecified "financing mechanisms."
In Brazil, LATAM for weeks has been negotiating a bailout of up to 2 billion reais ($367.45 million) that has yet to materialize. If negotiations are unsuccessful, LATAM acknowledged in its legal filing that its Brazil unit might file for bankruptcy as well.
Shares fell up to 41% in premarket trading in the U.S. before trading was suspended, a common practice when companies file for bankruptcy.
Delta Air Lines Inc last year paid $1.9 billion for a 20% stake during better times for the industry, becoming one of the largest shareholders in the company.
LATAM laid off 1,800 employees out of over 40,000 in the lead-up to its bankruptcy filing.
"We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option," Chief Executive Roberto Alvo said in a statement regarding the filing.
LATAM is an instantly recognizable brand for South Americans, dominating international air travel in the region, as well as a leading domestic flight operator in Brazil, Colombia, Chile, Argentina, Peru and Ecuador.
LATAM will continue to fly while it is in bankruptcy protection, the company said. Its affiliates in Argentina, Brazil and Paraguay were not included in the Chapter 11 filing.
LATAM said it had raised up to $900 million to support operations through its bankruptcy reorganization from major shareholders, including the Cueto family which controls the airline through various companies, the Amaro family and Qatar Airways.
LATAM was born in 2012 through a merger between Chile's LAN and Brazil's TAM, spawning a carrier with large aircraft order books and major exposure to Latin America's top economy as it went through its worst recession on record.
It has since dropped many plane orders but said it maintains 44 with Airbus and 7 with Boeing Co. LATAM said it would seek to cancel several of those orders, but didn't provide details.
LATAM said that as of Tuesday it had $7.6 billion in debt, including $460 million in loans tied to its Brazilian subsidiary which is not part of the bankruptcy process.
The airline was downgraded by S&P and Fitch on Friday after the company confirmed it did not pay interest and principal on three tranches of $1 billion worth of debt tied to the financing of new aircraft purchases.
($1 = 5.4429 reais)
(Reporting by Marcelo Rochabrun in Sao Paulo; Additional reporting by Rama Venkat in Bengaluru, Fabian Cambero in Santiago and Jamie Freed in Sydney; Editing by Kim Coghill, Jason Neely and Bernadette Baum) ((firstname.lastname@example.org; https://twitter.com/ramavenkat0607; within U.S. +1 646 223 8780, outside the U.S. +91 80 6182 2759))