The reason why LA is retiring all A350 is because they are not just at CH11 Bankruptcy, the economy of Brazil etc is now getting much worst too even before the pandemic and it's much more worst now to me. They will be cutting more flights within Brazil right after ending operation in Argentina.
I am sorry but you are wrong. the Brazilian economy is not as bad as you paint (for their standards anyway...) the market is there (will be once COVID19 subsidize).
The original plan for LATAM was to keep their Chilean and Brazilian Operations apart and, as such, given LATAM was already the launch customer for the A350 in South America, they envisage an all-Airbus operating entity with GRU as a main hub and would phase out the B77Ws making the Chilean a full B787 operator for long haul and the Brazilian a full A350. Something like AF/KL des.
It did not work out this way since the A350s did not correspond to their expectations and, through the experiment of moving B767s from LATAM Chile to LATAM Brazil, they realized that a single fleet would work better. COVID19 - and the reduction on flight demand - accelerated the process further.
I would say that LATAM Brazil will keep their B77Ws longer for now to ride out the storm, allied to the B767s it already has. The search will be on to find an alternative aircraft to replace those B77Ws once time is right (i.e. too old or economy improves). I am not sure the B789 is the answer because of capacity but a B778 is potentially an overkill (the B779 certainly is).
Time will tell. Overall the idea of allowing the Brazilian operation to be sold to LAN Chile was a mistake - they are very distinct entities it will always be a complicated matter in making them one. You could potentially see, LATAM "becoming too Chilean" (just as BA is moving to become "too Spanish" in their offering) and being replaced, for example, by AZUL on the Brazilian Market. This happened before when Varig went belly up...