Third-generation Northern Virginia real estate developer P. Reed Wills II is negotiating with about 40 lenders to restructure real estate debts of about $400 million and avert bankruptcy, sources said this week.

Wills, who is saddled with loans on thousands of acres of land in Northern Virginia, much of it near Dulles International Airport, is facing a deadline Friday to reach a partial agreement with creditors or risk being forced into bankruptcy, the sources said.

His creditors include some of the lenders most affected by the Washington-area real estate slump, such as the failed United Savings Bank of Vienna and National Bank of Washington -- both of which were taken over by federal regulatory agencies -- and Perpetual Savings Bank, which regulators have put under strict supervision. Sovran Bank, which has reported less severe problems, also is one of his largest creditors.

Like Washington real estate investors Conrad Cafritz and Dominic F. Antonelli Jr., Wills is asking numerous lenders to collaborate on a strategy to help him work his way out of trouble over a period of years. The alternatives for creditors are foreclosing on his property, seeking possession of his personal wealth through the courts, forcing him into bankruptcy court or trying to sell his property in a depressed real estate market.

If those and other major debt reorganization efforts now underway fail, control of billions of dollars of troubled real estate could shift to the Washington area's bankruptcy courts, financial experts said.

Wills declined to be interviewed. His lawyer, David Kuney of the firm David & Hagner, said he is confident that Wills will come to terms with his lenders. In a proposal made in December, Kuney said, Wills proposed keeping his property and developing it or selling it over several years when the market improves. Under the plan, the lenders would be repaid with the proceeds.

Although not well known to the general public, Wills is considered a major player in Washington area real estate development. The Wills family has been active in the business since the turn of the century. P. Reed Wills II has built office buildings, shopping centers and apartment buildings throughout Northern Virginia. But he is best known in real estate circles for land development -- buying land, guiding it through the approval process, installing roads and utilities and selling it to other commercial and residential developers who undertake the actual construction.

Wills was one of the original investors in McLean-based NVR L.P., then called NVHomes, when it was founded by Dwight C. Schar in the early 1980s. Wills sits on NVR's board of directors and holds a 15 percent stake in the firm, which has been hit hard by the area's slump in home sales. Wills's stake in NVR, which was worth about $84 million at its peak in 1987, is now worth about $2.4 million.

Wills was personally liable for real estate debts of $275 million as of July 31, when accountants reported on his finances, one source said. That was only part of the $411 million borrowed by Wills and various partnerships and corporations in which he is involved, the source said. It was not clear how much of the $411 million of debts is in default.

Wills was asking creditors for a $35,000 monthly living allowance for the term of the restructuring, the source said.

Kuney said Wills's creditors have been told "that an immediate liquidation would be detrimental to everyone's interests, both lenders and Mr. Wills'." He added, "Permitting Mr. Wills to retain the assets and develop them or sell them in a better market is the only rational and responsible way to increase value and obtain something closer to full repayment."

Wills is the president of Wills Chalmers, a Falls Church residential and commercial developer, and has several other companies, including Wills Commercial Inc., the Wills Cos. and Wills Investment Inc. He also owns a stake in Wills & Van Metre Cos., a builder founded by his father in the 1950s and run by others.

Dominion Bank of Virginia, one of Wills's largest creditors, won a Fairfax County Circuit Court judgment for $6 million against Wills and his wife, Joanne, in October. Dominion claimed they had defaulted on loans that they had personally guaranteed.

Dominion could lock in a priority claim on Wills's bank accounts and personal wealth Friday that would put it ahead of other lenders in line for repayment. The bank already extended that deadline once as it tried to reach a settlement with Wills. If Wills and Dominion do not reach a settlement acceptable to other creditors by Friday, the other creditors could try to force Wills into bankruptcy to set aside Dominion's priority status. Kuney said he was "optimistic" that the other creditors will accept a proposal by Dominion.

Dominion lawyer Douglas Ross declined to discuss the negotiations.

Wills has been sued by six lenders in Fairfax County Circuit Court in recent months. Earlier this month, Perpetual Savings Bank began foreclosure proceedings against two parcels of land in Fairfax County owned by a partnership headed by Wills. It has scheduled a foreclosure auction for Feb. 7, saying the partnership owes it $13.2 million.