Seven coachloads of people were left waiting in the cold after forking out £99 each for the trip to Torquay, run by Bilston company TT Tours.
The holiday would have seen people leave on Monday and stay at the Headland Hotel or the Riviera Hotel until tomorrow.
But coaches failed to turn up without any notice – leaving passengers stranded in the Black Country.
Holiday-goers were told to gather in Bilston Town Hall this morning for a refund, but have since been told the owner has gone bankrupt.
The £99 fee included travel, breakfasts and dinners, two excursions, a free bar and accommodation.
Now an investigation has been launched by Wolverhampton Council’s Trading Standards service after they received a series of complaints.
Dozens of complaints have been posted to the TT Tours Facebook page this week from disgruntled people.
Stacey Marie Yardley wrote: "A refund doesn't mend a broken heart. All these people that had this to look forward too."
Robert Turner and wife Elizabeth, aged 69 and 70, were among those to book on to the trip in October last year.
The couple, who live in Short Heath, even talked friends and family into booking the same trip.
Mr Turner said: “We’re absolutely gutted. I’ve been away with them before and there was no issue – but this has just been ridiculous.”
They were alerted by family members, who were due to be picked up in Wolverhampton, that the trip was not going ahead.
People say they have been told they will be refunded from this morning at the company’s stall on Bilston Indoor Market.
A coach driver did turn up in Wednesbury to inform waiting passengers the trip was not going ahead.
Seven members of Bentley’s over-60s club on Churchill Road, Walsall, booked through the group as compensation for a trip to Tenby which also fell-through at the last minute.
They said they had been left “disappointed” after this trip also collapsed.
A spokeswoman for Wolverhampton Council said: “Following complaints, this matter is now under investigation by our Trading Standards Service.”
The council is directing people affected to visit this website for more information www.wolverhampton.gov.uk/visiting/markets/important-information-about-your-consumer-rights-re-coach-holiday-torquay
The Express & Star has contacted TT Tours for comment.
A message on the TT Tours Facebook page said: "Tony Taylor [the owner] has messaged me this morning and confirmed that he will not be arriving and he is filing for bankruptcy. I have been in contact with the police who have said everyone is to contact action fraud/trading standards 03001232040. This is now in the hands of the action fraud."