A range of options are to be considered by councillors after the i360 failed to make a loan repayment.
The seafront landmark had been due to pay £900,000 at the end of December, but was unable to make the payment due to “difficult trading conditions”.
A spokesman for the council said that the administration would be “working closely with political groups and stakeholders” and that councillors would meet later this month “to consider a range of options” to recoup money lent to the attraction.
The landmark has an outstanding debt to the council of more than £47 million after missing a number of payments.
The latest default on the multi-million loan from the council has been blamed on a “particularly challenging” last quarter of 2022, along with declining visitor numbers due to the cost of living crisis.
The i360 had been due to make its latest payment on December 31, with a repayment of £600,000 due at the end of June.
A council spokesman said: “Owing to difficult trading conditions, the i360 was unable to make the minimum payment to us that was due at the end of December.
“We are working hard to ensure the council recoups money lent to Brighton i360 Ltd.
“We expect to hold a meeting of our police and resources committee before the end of this month for councillors to consider a range of options.
“All decisions must be focused on ensuring the best outcome for Brighton and Hove residents.
“As such, we will be working closely with all political groups and stakeholders.
“The i360 is still one of the city’s most popular visitors attractions and contributes positively to the local economy as well as having helped revitalise that area of the seafront.
“Like many businesses in the tourism and leisure sector trading conditions are particularly challenging right now.”
The default comes after the council and the i360 approved a new loan deal after the landmark struggled to meet its original repayment schedule.
Councillors from the policy and resources committee are due to meet on January 19.
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