The 178-year-old operator had been desperately seeking £200 million from private investors to save it from collapse.
Chinese peer Fosun, which was already the biggest shareholder in Thomas Cook, agreed last month to inject £450 million into the business as part of an initial £900 million rescue package.
In return, the Hong Kong-listed conglomerate acquired a 75 percent stake in Thomas Cook’s tour operating division and 25 percent of its airline unit.
In a statement, Fosun expressed “regret and disappointment” over failed efforts to save the company from bankruptcy.
The firm’s creditors held a marathon meeting on Sunday to try and work out a deal, followed by a meeting of the board of directors.
“Despite considerable efforts, those discussions have not resulted in agreement between the company’s stakeholders and proposed new money providers,” Thomas Cook said in a statement.
Reports said a collapse of the group would mean the repatriation of 600,000 tourists, including around 150,000 seeking government help returning to the UK.
The government said it had hired planes to fly home thousands of stranded holidaymakers to the UK, in an operation starting on Monday.
“Following the collapse of Thomas Cook and the cancellation of all its flights, Transport Secretary Grant Shapps has announced that the government and UK Civil Aviation Authority has hired dozens of charter planes to fly customers home free of charge,” a separate statement said, describing it as the largest repatriation in peacetime history.
Two years ago, the collapse of Monarch Airlines prompted the British government to take emergency action to return 110,000 stranded passengers, costing taxpayers some £60 million on hiring planes.
As well as the grounding of its planes, Thomas Cook has been forced to shut travel agencies, leaving the group’s 22,000 global employees – 9,000 of whom are in Britain – out of a job.
Holidaymakers had already reported problems, with guests at a hotel in Tunisia owed money by Thomas Cook being asked for extra money before being allowed to leave, according to a tourist. (AFP)