But ACAP wound down on Tuesday after failing to attract interest from larger creditors and being denied access to the sale process by Deloitte because it did not have secured funding.

Mr Hewish said he spoke to several institutional bondholders who were"preparing for the worst"and were resigned to the fact they will not recover any of the money they are owed.

"The most likely outcome is... there will be nothing for distribution to the creditors,"Mr Hewish said.

“It feels like a $1 deal because there’s too many balls in the air - what are the[wage agreements] going to be for the staff,what are the leasing arrangements going to be for the leased aircraft.

"I just can’t see how anyone could convince their investment committee to handover a couple of hundred million dollars to be distributed to the former creditors.”

Virgin's bondholders include large institutional investors as well as hundreds of"mum and dad"retail investors,many of whom bought in as recently as November,when Virgin raised $900 million to take back full ownership of its frequent flyer business.

Sydney based advisory Faraday is trying to organise Virgin's bondholders. But having"meekly stood by the sidelines and done nothing",Mr Hewish said bondholders would have to either accept Deloitte's deal or let Virgin go into liquidation.

Separately,Deloitte wrote to the government on Tuesday asking it to extend the Jobkeeper wage subsidy for airlines to give Virgin's shortlisted suitors - Bain Capital and Cyrus Capital Partners - confidence to make binding bids. It also asked for a consumer ticket guarantee to give the public confidence in the airline,which collapsed in April owing $6.8 billion.

Bain and Cyrus have until June 22 to lodge binding bids and Deloitte will put a preferred rescue package to a creditors'vote in mid-August. There is growing concern among bondholders about how much of their investment they will recover.