Video report by ITV News Business and Economics Editor Joel Hills
17:10 on Sunday September 22 was the moment it became clear that Thomas Cook was going bust.
The company’s chief executive, Peter Fankhauser, received a call informing him that his request for government support had been rejected.
A frantic weekend of talks to save the business, involving Thomas Cook, its lenders and Fosun (the largest shareholder), had already ended in failure.
Insolvency was now inevitable.
ITV News has seen a copy of a letter that was sent to Mr Fankhauser on the evening of September 22, setting out the government’s reasons for refusing to intervene.
The letter was signed on behalf of Gareth Davies, Director General of the Department of Transport, and it suggests that the decision to allow Thomas Cook to fail was ideological.
"Financial intervention by the Government is on an exceptional basis," Mr Davies wrote.
"Any financial assistance would represent HMG intervention in the commercial market and creates a significant precedent risk to the private sector in future restructurings."
Put another way, the government’s concern was "if we rescue Thomas Cook, other companies in distress will expect the same treatment".
The principle of moral hazard is well-established but, what is remarkable, is it is the only reason the government offered for rejecting Thomas Cook’s request for help.
Watch the moment after Thomas Cook's chief executive, Peter Fankhauser, found out the company will go bust
Remember, the government was being asked to support a detailed recapitalisation plan, one that was intended to leave Thomas Cook debt free and solvent.
Did the government carry out an assessment of the viability of the plan? Was the plan discussed with other European governments? The letter doesn’t say.
The letter does acknowledge the serious implications of the decision not to support the rescue plan.
Mr Davies wrote: "The consequences of the Company’s entry into insolvency, are, as you have outlined, very serious.
"I therefore thank you for the cooperation to date and ask that your team continues to work with the Civil Aviation Authority (CAA) and government to put in place contingency plans for this eventuality, given the impact on passengers, suppliers, employees and other businesses."
Thomas Cook had formally approached the government for help on Wednesday September 18.
A deal to rescue the business, which had been agreed at the end of August, was in the process of unravelling.
Thomas Cook, its banks, its bond-holders and its biggest shareholder (Fosun) had given their backing to a restructuring of the business.
As part of the agreement, debt was being exchanged for equity. The £1.7 billion Thomas Cook owed was to be written off and the business split in two.
Fosun planned to take a controlling stake in the tour operator and Thomas Cook’s lenders a controlling stake in the airline.
But the recapitalisation plans relied on all sides accepting some pretty hefty losses. Initially there had been a willingness to but commitment had begun to fray.
On September 9 several banks, among them RBS, Lloyds and Barclays, decided that up to £200 of extra funding was required, above and beyond what had already been pledged, if the restructuring was going to succeed.
No one was to dig deeper so, in desperation, Thomas Cook turned to the government for support.
ITV News has seen a copy of the “commercial proposal” Thomas Cook submitted to government.
Marked “Strictly Private And Confidential”, dated September 18 and addressed to Mr Davies, it sets out an overview of the recapitalisation agreement - referred to as “Project Avenue” - and asks the government to participate.
Thomas Cook wanted the government to agree to guarantee "a standby facility of between £150 million and £200 million" provided by "a sub set of its core lending banks".
The funds would be available to the company to call on for three years and "would be repaid before other financial indebtedness is repaid".
In return for standing behind the facility and to avoid falling foul of state aid rules the government would receive a fee and (in the event of the facility being used) interest "commensurate with the interest rate to be given to the primary lenders".
The proposal promised the taxpayer the same level of protection being offered to the banks.
"HM Government’s exposure under the guarantee would be secured, ranking pari passu with amounts owed by the Thomas Cook Group to its lenders in respect of the core facilities being advanced pursuant to Project Avenue."
Thomas Cook was seeking financial support from the government and, failing that, help in the negotiations with its lenders. The proposal urges Mr Davies to "exert all pressure that HM Government is capable of on the various stakeholders whose support is needed".
Thomas Cook’s proposal referred to the contingency planning - referred to as Project Saturn - that had been carried out with the CAA to deal with the "very serious" consequences of the business failing.
Thomas Cook argued that it was worth the government putting up to £200 million of taxpayers' money on the line to support the recapitalisation because its exposure to the company’s collapse was far greater.
"The maximum cost to HM Government that could arise under this proposal would likely be extremely modest when compared with Project Saturn," the letter states, estimating the cost to taxpayer of the repatriation mission alone "to be in the region of several hundred million pounds".
Thomas Cook argued that the support it was seeking did not qualify as a "bail out" because its shareholders had already suffered significant losses and its lenders were set to write off most of the money they were owed.
"The key beneficiaries" of financial help from government, the proposal states, "will be Thomas Cook’s customers, suppliers and employees".
The proposal stresses the need to keep the repatriation plans private.
"Once [Project Saturn’s] existence becomes more widely known, it is at risk of creating the very outcome we are all working to avoid (that is, a self-fulfilling prophesy)."
The proposal is signed by Mr Fankhauser, Thomas Cook’s chief executive, and warns of the need for a swift action. "If a commercial agreement is not reached by Sunday evening...as a Board we will likely be compelled to conclude that there is no longer a reasonable prospect of avoiding insolvency."
The government’s response arrived late on Sunday afternoon,as the Thomas Cook board prepared to assemble for what turned out to be the final time.
Thomas Cook's chief executive, Peter Fankhauser, announcing the company had gone under
It was emphatic. Mr Davies wrote that the company’s request for financial help "cannot be supported".
And neither was the government willing to get involved in the negotiations.
"The recapitalisation at hand is a private transaction involving listed companies," Mr Davies wrote.
"It would not be appropriate for HMG to attempt to influence this."
The government had decided that taxpayers money was better spent dealing with the aftermath of the failure of the company rather than seeking to prevent it.
What isn’t clear from the letter is how this decision was arrived at, beyond a reluctance to get involved.
In the days afterwards, the government presented the decision not to rescue Thomas Cook as a straightforward one.
In the words of the Transport Minister, Grant Shapps, "it would have been throwing good money after bad".
But events since the company’s collapse have raised questions about whether more could and should have been done.
The German government and the state of Hesse has agreed to off 380m euros of loan guarantees to rescue Condor, Thomas Cook’s German airline. The move, which still requires EU approval, saves 4,900 jobs.
Condor is profitable but so too was Thomas Cooks' UK airline, which I’m told made around £50m in the year ending September 2018. The German government offered limited, targeted taxpayer support. Some argue that the British government could and should have done the same.
The failure of Thomas Cook will cost the taxpayer millions. The CAA estimates the final bill for the repatriation effort, which is now complete, could exceed £100m.
The CAA has indicated that the ATOL protection fund will be able to cover the £420m required to refund those holding Thomas Cook holidays they have yet to take. But the fund is likely to be exhausted, leaving the taxpayer potentially exposed should another travel company fold.
On Tuesday morning an inquiry by MPs into the collapse of Thomas Cook gets underway with the company’s directors, including Mr Fankhauser, Frank Meysman (former chairman) and Sten Daugaard (former CFO) the first to appear.
MPs will want to know who was to blame for the failure of the business. They will also look at whether the government should have done more to support it.
None of the company’s former board of directors were available for comment.
In a statement, the Department for Transport said: "An analysis of Thomas Cook’s financial position, coupled with the government’s belief it should not prop up private airlines or tour operators, resulted in a carefully considered decision being taken not to intervene in the company."