diff --git a/x/axelarnet/keeper/migrate.go b/x/axelarnet/keeper/migrate.go
index 18f7585e7..c4f83dd6a 100644
--- a/x/axelarnet/keeper/migrate.go
+++ b/x/axelarnet/keeper/migrate.go
@@ -11,34 +11,65 @@ import (
 
 // Migrate6to7 returns the handler that performs in-place store migrations from version 6 to 7
 func Migrate6to7(k Keeper, bankK types.BankKeeper, accountK types.AccountKeeper, nexusK types.Nexus, ibcK IBCKeeper) func(ctx sdk.Context) error {
-
 	return func(ctx sdk.Context) error {
 		// Failed IBC transfers are held in Axelarnet module account for later retry.
 		// This migration escrows tokens back to escrow accounts so that we can use the same code path for retry.
-		axelarnetModuleAccount := accountK.GetModuleAddress(types.ModuleName)
-		nexusModuleAccount := accountK.GetModuleAddress(nexus.ModuleName)
-
-		balances := bankK.SpendableCoins(ctx, axelarnetModuleAccount)
-		for _, coin := range balances {
-			asset, err := nexusK.NewLockableAsset(ctx, ibcK, bankK, coin)
-			if err != nil {
-				k.Logger(ctx).Info(fmt.Sprintf("coin %s is not a lockable asset", coin), "error", err)
-				continue
-			}
-
-			// Transfer coins from the Axelarnet module account to the Nexus module account for subsequent locking,
-			// as the Axelarnet module account is now restricted from sending coins.
-			err = bankK.SendCoinsFromModuleToModule(ctx, axelarnetModuleAccount.String(), nexusModuleAccount.String(), sdk.NewCoins(asset.GetAsset()))
-			if err != nil {
-				return err
-			}
-
-			err = asset.LockFrom(ctx, nexusModuleAccount)
-			if err != nil {
-				return err
-			}
+		err := escrowFundsFromFailedTransfers(ctx, k, bankK, accountK, nexusK, ibcK)
+		if err != nil {
+			return err
+		}
+
+		// All IBC transfer are routed from AxelarIBCAccount after v1.1
+		// This migration updates the sender of failed transfers to AxelarIBCAccount for retry
+		err = migrateFailedTransfersToAxelarIBCAccount(ctx, k)
+		if err != nil {
+			return err
 		}
 
 		return nil
 	}
 }
+
+func escrowFundsFromFailedTransfers(ctx sdk.Context, k Keeper, bankK types.BankKeeper, accountK types.AccountKeeper, nexusK types.Nexus, ibcK IBCKeeper) error {
+	axelarnetModuleAccount := accountK.GetModuleAddress(types.ModuleName)
+	nexusModuleAccount := accountK.GetModuleAddress(nexus.ModuleName)
+
+	balances := bankK.SpendableCoins(ctx, axelarnetModuleAccount)
+	for _, coin := range balances {
+		asset, err := nexusK.NewLockableAsset(ctx, ibcK, bankK, coin)
+		if err != nil {
+			k.Logger(ctx).Info(fmt.Sprintf("coin %s is not a lockable asset", coin), "error", err)
+			continue
+		}
+
+		// Transfer coins from the Axelarnet module account to the Nexus module account for subsequent locking,
+		// as the Axelarnet module account is now restricted from sending coins.
+		err = bankK.SendCoinsFromModuleToModule(ctx, axelarnetModuleAccount.String(), nexusModuleAccount.String(), sdk.NewCoins(asset.GetAsset()))
+		if err != nil {
+			return err
+		}
+
+		err = asset.LockFrom(ctx, nexusModuleAccount)
+		if err != nil {
+			return err
+		}
+	}
+
+	return nil
+}
+
+func migrateFailedTransfersToAxelarIBCAccount(ctx sdk.Context, k Keeper) error {
+	transfers := k.getIBCTransfers(ctx)
+	for _, transfer := range transfers {
+		if transfer.Status != types.TransferFailed {
+			continue
+		}
+
+		transfer.Sender = types.AxelarIBCAccount
+		if err := k.setTransfer(ctx, transfer); err != nil {
+			return err
+		}
+	}
+
+	return nil
+}
diff --git a/x/axelarnet/keeper/migrate_test.go b/x/axelarnet/keeper/migrate_test.go
index 48c084337..d3f14b45b 100644
--- a/x/axelarnet/keeper/migrate_test.go
+++ b/x/axelarnet/keeper/migrate_test.go
@@ -13,10 +13,13 @@ import (
 	"github.com/axelarnetwork/axelar-core/testutils/fake"
 	"github.com/axelarnetwork/axelar-core/testutils/rand"
 	"github.com/axelarnetwork/axelar-core/x/axelarnet/keeper"
+	"github.com/axelarnetwork/axelar-core/x/axelarnet/types"
 	"github.com/axelarnetwork/axelar-core/x/axelarnet/types/mock"
+	axelartestutils "github.com/axelarnetwork/axelar-core/x/axelarnet/types/testutils"
 	nexus "github.com/axelarnetwork/axelar-core/x/nexus/exported"
 	nexusmock "github.com/axelarnetwork/axelar-core/x/nexus/exported/mock"
 	nexustypes "github.com/axelarnetwork/axelar-core/x/nexus/types"
+	"github.com/axelarnetwork/utils/funcs"
 	. "github.com/axelarnetwork/utils/test"
 )
 
@@ -26,6 +29,7 @@ func TestMigrate6to7(t *testing.T) {
 		account       *mock.AccountKeeperMock
 		nexusK        *mock.NexusMock
 		lockableAsset *nexusmock.LockableAssetMock
+		transfers     []types.IBCTransfer
 	)
 
 	encCfg := app.MakeEncodingConfig()
@@ -59,15 +63,33 @@ func TestMigrate6to7(t *testing.T) {
 			},
 		}
 	}).
-		When("Axelarnet module account has balance for failed cross chain transfers", func() {
+		When("there are some failed transfers and Axelarnet module account has balances", func() {
 			bank.SpendableCoinsFunc = func(ctx sdk.Context, addr sdk.AccAddress) sdk.Coins {
 				return sdk.NewCoins(rand.Coin(), rand.Coin(), rand.Coin())
 			}
+
+			for i := 0; i < 50; i++ {
+				transfer := axelartestutils.RandomIBCTransfer()
+				if i%2 == 0 {
+					transfer.Status = types.TransferFailed
+				}
+				transfers = append(transfers, transfer)
+				assert.NoError(t, k.EnqueueIBCTransfer(ctx, transfer))
+			}
 		}).
-		Then("the migration should lock back to escrow account", func(t *testing.T) {
+		Then("the migration should lock back to escrow account and update sender of failed transfers", func(t *testing.T) {
 			err := keeper.Migrate6to7(k, bank, account, nexusK, ibcK)(ctx)
 			assert.NoError(t, err)
 			assert.Len(t, lockableAsset.LockFromCalls(), 3)
+
+			for _, transfer := range transfers {
+				actual := funcs.MustOk(k.GetTransfer(ctx, transfer.ID))
+				if transfer.Status == types.TransferFailed {
+					assert.Equal(t, types.AxelarIBCAccount, actual.Sender)
+				} else {
+					assert.Equal(t, transfer.Sender, actual.Sender)
+				}
+			}
 		}).
 		Run(t)
 }
diff --git a/x/axelarnet/keeper/msg_server.go b/x/axelarnet/keeper/msg_server.go
index 804dc3fdd..4015ac332 100644
--- a/x/axelarnet/keeper/msg_server.go
+++ b/x/axelarnet/keeper/msg_server.go
@@ -479,8 +479,6 @@ func (s msgServer) RetryIBCTransfer(c context.Context, req *types.RetryIBCTransf
 	if err != nil {
 		return nil, err
 	}
-	// Notice: all IBC transfer are routed from AxelarIBCAccount after v1.1
-	t.Sender = types.AxelarIBCAccount
 
 	err = s.ibcK.SendIBCTransfer(ctx, t)
 	if err != nil {