Latam Airlines Group SA is close to launching a chapter 11 exit strategy backed by some unsecured creditors as it vies to fend off a competitor’s efforts to build support for a proposed business combination, people familiar with the matter said.

The Chilean airline is nearing a restructuring deal with large unsecured creditors and certain shareholders that revolves around an equity sale to recapitalize the business and ease an exit from bankruptcy, according to the people familiar with the matter.