Talks between the Dubai government and one of its largest conglomerates, Dubai Group, have stalled over plans to restructure its $10bn debt.

The group, which is one of three companies owned by Dubai Holdings and backed by the ruler of Dubai Sheikh Mohammed bin Rashid, has been in crisis negotiations with the Emirate's Supreme Fiscal Committee (SFC) over paying back its creditors.

According to reports in the Dubai press, senior figures in the government have walked away from the year long discussions, and that no money from the government would be forthcoming.

Dubai Group, which specialises in real estate and financial services, stopped paying interest on its debts back in August 2010, which includes around $6bn owned to banks including the Royal Bank of Scotland and French bank Natixis.

Rating agency Moody's expressed concerns in December 2011 that the Emirate's $3.8bn debt maturities earmarked for 2012 which involved companies with government-related issuers such as Dubai Holdings, would face volatility in coming months. Dubai Group's weakness will be its dependency on business segments such as retail property development and financial services which are both suffering in the current climate, Moody's said.

The shine has come off Dubai's reputation as a Middle East powerhouse in recent years and has tried to borrow from its UAE cousins. However this support has fizzled out in the past two years.

Dubai Holding's $500m bond matures on 12 February and sources close the company have said creditors of Dubai Group will be updated with a new plan of action later this month. A spokesman for the company said it was still in negotiations with its lenders.