The insolvency company for WOWFest says people who bought tickets are unlikely to get their money back.
Business which paid for pitches at the festival will also be left out of pocket.
Ian Rose from Silke and Co., the liquidators handling WOWFest's insolvency, told Isle of Wight Radio that the company behind the festival has simply run out of money.
'On present information there's litle likelihood of any money being paid to creditors whether it be for ticket sales or for pitches paid for the site at the festival', he said.
'There are a lot of up front costs in respect to putting on festivals. These have been paid and as a result the company just ran out of money.
'From the creditors point of view, there's no chance of a recovery.', he added.
WOWFest, which was due to be held near Shanklin in August, was scrapped after police raised concerns about safety.
Leader of Isle of Wight Council David Pugh says he has reported WOWFest to the police.
He told Isle of Wight Radio that he has reason to believe the company has breached trading standards, and says it is potentially a criminal matter.
Isle of Wight Radio has attempted to contact the organisers of WOWFest for a comment.
We'd like to hear from you if you've been left out of pocket after buying tickets or pitches at WOWFest. Leave your comments below, or email email@example.com