The iconic Byron Bay music festival may have been trading while insolvent for months before it collapsed, according to a new liquidator's report.

A report into the cancelled Byron Bay Bluesfest reveals creditors are unlikely to be repaid the millions of dollars they are owed.

Creditors of the music festival, owed over $7 million, can expect less than 11 cents in the dollar back as a liquidator investigates transaction made by founder Peter Noble.

Creditors of the festival, owed more than $7 million, can expect less than 11¢ in the dollar back as a liquidator investigates transactions made by founder Peter Noble.

The iconic Byron Bay music festival may have been trading while insolvent for months before it collapsed, according to a new liquidator's report.