The announcement sent its shares up over 10% on Monday.
The retailer, more than 50 years old, has faced a stream of lawsuits since revealing holes in its accounts in December 2017, the first sign of a fraud estimated to total $7 billion, and is still battling to recover.
Chief Executive Louis du Preez said Steinhoff had been working for 12 months to put together the settlement, and urged all claimants to support it.
"Although there is no certainty yet that we will be able to conclude this settlement, in our view these terms are firmly in the best interests of all stakeholders," he said in a statement.
If creditors, regulators and claimants approve the proposal, it will remove a huge question mark over the company's survival.
Steinhoff has said it would have to liquidate if it was required to pay the more than 90 separate legal claims in full.
The chief executive of the Dutch shareholder group VEB, Paul Koster, recommended that all VEB's partners, members and other constituents support the proposal and said VEB had agreed to withdraw its collective legal claim against Steinhoff in the Netherlands with immediate effect.
"It is a positive proposal for injured shareholders, which shows Steinhoff's commitment to resolve those issues in very challenging circumstances," Koster said in a statement.
Other claimants, including South African businessman Christo Wiese, either did not immediately respond to requests for comment or could not be reached.
The claims against Steinhoff totalled over 9 billion euros in 2019, according to the firm's annual report.
Steinhoff said not all the claims would be covered by the settlement, which would be paid in cash and in shares in the South African retailer Pepkor, a Steinhoff subsidiary. ($1 = 16.5507 rand)
($1 = 0.8542 euros)
(Additional reporting by Nqobile Dludla; Editing by Olivia Kumwenda-Mtambo and Kevin Liffey)
By Emma Rumney