The inquiry into the collapse of Liverpool's Fourth Grace scheme got under way on Monday when the scrutiny panel of the city council's regeneration committee sat publicly for the first time.
The panel will grill key decision makers and developers on the project to find out why Will Alsop's scheme, the centrepiece of the European Capital of Culture bid, failed. A verdict is expected by the end of September.
Meanwhile, the privately led consortium behind the proposals is in negotiations with the Northwest Development Agency (NWDA) in a bid to recover its costs. There are indications the consortium could sue if talks fail.
A source close to the group said: 'We have already spent millions of pounds based on assurances from the public sector that if they pulled out, we would have an option on the site.'