Administrators for the largest employer on the Cocos (Keeling) Islands have warned residents the community-owned organisation is $2.5 million in debt.

It is a figure expected to climb "significantly" amid a mounting fear of cutbacks in critical services.

The Cocos Islands Co-Operative Society, or Cocos Co-Op, called in voluntary administrators from insolvency firm Cor Cordis late last week.

Established as the commercial arm of the Cocos Malay community in 1978, the co-op currently employs 74 people of a population of about 600.

It is also responsible for logistics, freight, hospitality, and infrastructure across the remote Indian Ocean territory almost 3,000 kilometres north-west of Perth.

At a community information session on Thursday residents heard business would continue as normal despite the co-op owing $1.8 million to the Australian Taxation Office (ATO) alone.

"If there is a need for any cost-cutting or cost changes then we'll obviously have to look at those," Cor Cordis partner Jeremy Nipps said.

Mr Nipps told the ABC administrators were still investigating the amount potentially owed to employees in entitlements and superannuation.

They were so far aware of one former employee whose resignation was not reflected in company records despite having quit towards the end of last year.

"There's some concern that there would be other employees in a similar position and again we need to work through that and speak with those employees and get the information," Mr Nipps said.

The co-op, according to ATO records, employed around 90 people in June 2024.

Cor Cordis has not yet determined whether the employees who left in the three months before administration received their due compensation. 

'Diabolical' lack of services

The co-op's financial troubles casts doubt on several services embedded in day-to-day life on the tropical islands including the West Island supermarket, the local ferry system, and shipments from distant Australia.

But for some residents the news confirmed long-held suspicions after years of poor communication with shareholders.

Ayesha Young first arrived on the Cocos (Keeling) Islands as a nurse more than 13 years ago.

She said the co-op had not supplied diesel to Home Island, one of the southern atoll's two inhabited islands, for weeks.

"We have to go over and lug plastic jerry cans full of diesel fuel," she said.

"We've got to go fill up, put it in the van, walk it along the beach, load the boat and drive it over, and lug it up to the house because we're not allowed to take fuel on the ferry.

Shire chief executive Frank Mills said he remained hopeful the co-op would remain community owned, but it was still early days.

"The whole business model of the co-op will obviously come under the microscope at some stage, well down the track," he said.

"The first step is to work out how it's got to the position where it is at the moment, and once you work that out you can then start looking at what the future of the co-op is.

"I still think there's going to be enormous potential there to retain the current employees."

Uncertainty ahead

Mr Nipps said administrators were working through the co-op's books but will need more time to establish whether any services were halted before the company collapsed.

To this end, Cor Cordis signalled plans to apply for an extension of the administration's convening period.

An extension, if successful, means "it could be anywhere between three to six months" before residents have a clearer picture of how the co-op will be restructured and the impact on employees.

"It's an entangled situation," Mr Nipps said.

"As a shareholder they probably don't have the same rights and entitlements as what the creditor does, but they're just as important in making sure we support [and] they support the services the co-op provides."

The administrators are set to meet with the community again in the first week of November.