Thomas Cook, Britain’s oldest travel agent, was close to collapsing on Sunday night as last-ditch rescue talks looked like ending in catastrophic failure.
Sky News has learnt that the company’s creditors and the government are anticipating an announcement on Monday morning that the 178-year-old business had ceased trading – with a new Whitehall taskforce set up to address the crisis.
A final decision by Thomas Cook Group’s directors to appoint insolvency practitioners is expected to be taken in the early hours of Monday “barring a last-minute miracle”, they added.
Insiders told Sky News that the Official Receiver was expected to be involved in any insolvency process, with KPMG, the big four accountancy firm, handling the administration or liquidation of Thomas Cook’s UK tour operating division – which comprises more than 550 high street shops.
AlixPartners is expected to oversee the insolvency of the group’s airlines, with the Department for Transport and Civil Aviation Authority co-ordinating the biggest-ever peacetime repatriation of British citizens.
In total, Thomas Cook has more than 600,000 customers currently overseas, more than 160,000 of whom are from the UK.
Sources said the government was expected to launch a joint taskforce to oversee Whitehall’s response to the crisis, which will pose an immediate threat to 9000 UK-based jobs.
The fading hope of a rescue emerged hours after Thomas Cook issued a last-gasp plea to its lenders to reduce a £200m funding demand.
During talks at the City law firm Latham & Watkins on Sunday, the company asked its syndicate of lenders to substantially cut the standby funding they require to see Thomas Cook through the winter period.
Alongside the request to the lenders, credit card companies were asked to release £50m of cash they are holding as collateral against Thomas Cook holiday bookings.
They represented a frantic last throw of the dice for a company which was forced to seek more than £1bn in new funding following a £1.5bn half-year loss and deteriorating trading.
A source close to the commercial discussions said that Sunday’s talks were yet to produce meaningful progress towards a successful deal.
The government was not minded to step in to meet an urgent request from the company for financial assistance, they added.
If confirmed, the collapse of Thomas Cook will end close to two centuries of unbroken trading, in which it was a pioneer of the package holiday concept and owned other prominent brands such as Club 18-30.
It is possible that the Thomas Cook brand and some of its British jobs will be salvaged through any sale out of insolvency, although the events of recent months – with the company dogged by persistent fears over its finances – may have irreparably damaged one of the proudest names in British business.
As recently as last month, a rescue deal had appeared on the cards, with Fosun Tourism Group, the owner of Club Med, committing £450m to Thomas Cook.
Under that deal, Thomas Cook’s lenders and bondholders would have also contributed £450m, with its tour operating and airline businesses split into two companies.
In recent days, the London-listed company has explored a multitude of options to raise the remaining £200m demanded by its banking syndicate two weeks ago.
Many of those were discounted because of insufficient time to implement them before Thomas Cook ran out of money.
Union bosses urged ministers to nationalise Thomas Cook on Sunday, arguing that the cost of doing so would be trivial in the context of the bank bailouts of 2008.
Weak trading, which company executives have partly blamed on Brexit-related uncertainty, has forced them to increase Thomas Cook’s financing requirements several times in recent months.
Sky News revealed on Thursday that Thomas Cook, which was founded in 1841, was expected to crash into administration as soon as Sunday night unless the £200m funding gap could be filled.
More than 20,000 jobs across the group are at risk if its collapse is confirmed.
Thomas Cook had already warned that it could face collapse unless it finalises a rescue deal this month, saying in a court filing last week that it “would be likely to run out of money and enter into formal insolvency proceedings” if it did not.
Some 11 million customers will have travelled with Thomas Cook by the end of the crucial summer season.
Efforts to secure its rescue have, though, been hampered by weak trading and the competing demands of financial stakeholders including its pension trustees and the holders of insurance against default on its debts.
Thomas Cook has been targeting the injection of new money from the recapitalisation by early October in order to pay hoteliers and other key suppliers.
In order to survive, it would also have needed to persuade the CAA, which administers the ATOL scheme covering travel companies, that it should renew its licence at the end of September for another 12 months.
Current trading at Thomas Cook is understood to have remained difficult for months, with the ongoing political crisis in Westminster contributing to soft consumer demand for autumn and winter bookings.
On Friday shares in Thomas Cook closed at 3.45p, more than 95% lower than at the same point last year.
The British company was founded in 1841 by a 32-year-old cabinet-maker and former Baptist preacher who began offering one-day rail excursions from Leicester to Loughborough for a shilling.
From there, it went on to become one of the world’s largest holiday companies, marking its 175th anniversary three years ago.
Thomas Cook declined to comment on Sunday evening.