Odebrecht SA’s ethanol unit, in a court fight with creditors including Lone Star Funds and Castlelake LP, is running out of time to reach a deal that avoids a filing for bankruptcy protection by the company.

Atvos SA doesn’t have enough cash to make court-ordered deposits due at the end of this month while continuing normal operations, according to people close to the company with knowledge of the matter. The firm is still trying to reach an out-of-court settlement with local banks, which are its biggest creditors, that could then be imposed on the funds.

Lone Star, the Dallas-based investment...