Dubai World, the state-owned investment vehicle, says it has reached an agreement "in principle" with most of its bank lenders to restructure debt worth $US23.5 billion.
It added it would be left with debts of $US14.4 billion after the restructuring.
The BBC reports the deal must still be approved by other banks that were not involved in the negotiations.
Dubai World stunned global markets in November last year when it asked for a six-month delay on debt repayments.
The Royal Bank of Scotland was the lead bank in a seven-strong co-ordinating committee negotiating Dubai World's debts.
There are a further 90 lenders exposed to the risk of default.
The problems at Dubai World stemmed largely from its property development operation, Nakheel, which needed money to pay investors an Islamic bond.