Local TV firm BLTV went bust to the tune of £195,000 with no physical assets to its name - leaving investors and legal advisers out of pocket with uncertain prospects of compensation.
The company, which traded as City TV and was led by former Birmingham City Council PR boss Debra Davis, collapsed last week nearly two years after being granted the licence by Ofcom.
Administrators at Duff & Phelps will now seek to secure as much compensation as possible in any negotiations with would-be licence holders.
It is understood that BLTV has no assets – apart from the licence – to realise funds for creditors, with no investment in studio premises or equipment since the Ofcom announcement in November 2012.
Now competing bidders will have to negotiate with the administrators in any bid for the licence as Duff & Phelps seeks to retrieve some redress for BLTV's creditors.
Andrew Taylor, head of corporate recovery at Shakespeares, who has been acting for a number of creditors involved in the City TV project and is now working with the administrators, said the collapse of BLTV was a "positive step".
"Placing City TV in administration is a positive step forward for the existing creditors who stand to gain nothing from their investment unless an interested buyer can be found," he said.
"Interest in the local TV station is already high and the project seems to have captured the imagination. All involved are hoping to have more positive news to communicate before too long."
Ms Davis said in a statement earlier this week: "It is with great regret that BLTV, City8, has gone into administration.
"There were plans being negotiated to rescue the company but creditors rejected early conversations in favour of proceeding with their application. There are a number of factors which led to this but we need to look ahead.
"I am confident that administrators will work towards a solution and I have offered them my support as the company director.
"Jeremy Hunt, former Secretary of State for Department of Culture, Media and Sport, had an ambition to bring truly local television to the UK.
"This is so important to towns and cities across the country, especially outside the M25.
"I am saddened that we couldn't help deliver that vision but it is one that I believe would make a game-changing difference to a lot of communities and local interests."
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