Talks have broken down between developer and World Trade Center leaseholder Larry Silverstein and the property's 25 insurers, according to a recent report in the Daily News.

The stalemate could signal the beginning of a legal battle that could determine the fate of the WTC site.

On Friday, Mr. Silverstein's lawyers took steps to sue 22 insurance companies.

He has already taken legal action against three insurers who insured the Twin Towers at the time of the terrorist attack.

"It is unfortunate that we have been forced to sue to enforce our rights," Mr. Silverstein said in statement.

Mr. Silverstein took over the World Trade Center from the Port Authority last July in a 99-year, $3.2 billion lease.

He bought insurance from a group of 25 companies who shared the risk.

The insurance provided about $3.5 billion of coverage for each "occurrence".

In the weeks following the attack, Mr. Silverstein argued that each airplane crash marked a separate occurrence, entitling him to an insurance payout of more than $7 billion.

One of the insurers, Swiss Re - which has an office in Bermuda - through its US subsidiary, SR International, went to the courts immediately for clarification on what is owed and to whom.

Its stance, which has been backed by other insurers, is that the event constitutes one event.

Swiss Re sued Mr. Silverstein in October, asking a federal court in Manhattan to declare that the events of September 11 amounted to one occurrence and limit the developer's coverage to $3.5 billion.

Meanwhile, Mr. Silverstein not only countersued Swiss Re, but filed suits against Bermuda-based ACE and XL, who want the claim decided by a London arbitrator. Talks with ACE and XL continue.

During this time, the developer's lawyers kept up settlement talks with the remaining insurance companies, negotiating an initial flow of money so he could keep making lease payments to the Port Authority.

The other insurance companies include Travelers, Liberty Mutual, Zurich US, and Chubb.

Yesterday, Silverstein's lawyers filed suit against Travelers and asked permission to add the other companies as defendants to the Swiss Re suit.

The action indicates the other insurance companies will also try to limit Silverstein's coverage to $3.5 billion under a one-occurrence theory.

The outcome could determine what gets built at Ground Zero.

Mr. Silverstein wants to rebuild the lost ten million square feet of office space, while leaving room for a memorial.

Cost estimates for rebuilding run from $4 billion to $6 billion.

In the meantime, Mr. Silverstein must continue to make annual rent payments of about $110 million a year.

"We are confident of our legal position that the crashes of two separate planes into two separate towers at two separate times entitle us to claim that there was more than one occurrence," Silverstein said.