Wooldridges was insolvent at least two months before its collapse, believe its administrators, who have recommended the WA schools supplier be wound up.
Grant Thornton's second creditors report also confirmed there was little likelihood of the administrators realising enough from the company's remnants to cover the $1.7 million owed to its retrenched employees.
Once Wooldridges was in liquidation, the nearly 100 former staff would be able to claim for payment of most of their entitlements from the government-funded General Employee Entitlements and Redundancy Scheme (GEERS).
Also, liquidators would have the power to pursue a potential insolvency trading action against Wooldridges' single director at the time of its failure on July 25.
Grant Thornton said it believed the company was insolvent from at least May but it had been under stress for much longer.
Its losses blew out from $362,000 in 2009-10 to $7.45 million for the 11 months to May 31 when its net asset deficiency was nearly $27 million.
But administrators noted Wooldridges may have held out hope of returning to solvency because it was talking to banks about securing fresh funds. Those hopes finally evaporated on July 25 when Macquarie Bank withdrew agreement to provide a $7 million lifeline.
Wooldridges owes an estimated $55 million to more than 800 creditors, including schools. But with $17 million owed to National Australia Bank and little of value left apart from stock, there will be little enough to satisfy NAB's debt let alone meet unsecured claims.
Grant Thornton said it had more than 20 expressions of interest in all or part of the Wooldridges business and remained in negotiations.
Many of Wooldridges' customers, however, have already moved to its competitors, chiefly Campion Education and OfficeMax, who have hired some of the company's former sales staff.