This weekend, one of the most exciting music festivals for years was due to take place in London. It was called Jabberwocky, and was two days featuring everyone from Mercury prizewinner James Blake, to indie legends Neutral Milk Hotel. Now, it won’t.

At 4.30pm on 12 August – just three days before the event was due to start – the much-feted promoter behind it, All Tomorrow’s Parties, issued a statement. “Despite healthy ticket sales, all our efforts could not take [them] to the point that we needed,” it said. “If we had gone ahead; it would have 100% been the end of [us].”

To many who had bought tickets, the news was a shock. “WHAT THE ACTUAL FUCK? It is NOT UNDERSTANDABLE to cancel an ENTIRE EVENT three days before,” said a typical post on ATP’s Facebook page. “I have many friends who have bought plane tickets, paid for accommodation to come along.”

Such reactions were perhaps understandable given ATP’s status – it’s renowned for starting the trends of festivals at holiday camps, and of bands playing classic albums in full. The music website Pitchfork and Spanish festival promoter Primavera were also involved in promoting Jabberwocky, giving it a lot of credibility. ATP also tweeted this in July: “We are already looking into acts for next year’s Jabberwocky. No chance this one is getting cancelled!”

But to many music industry watchers, the cancellation was met less with surprise than with a resigned, “I told you so.” For a start, there was the venue. Jabberwocky was initially meant to be held at the Olympic Park in Stratford – ATP even briefly sold tickets for it there (the Mayor of London’s office said they never received a booking). But then the event was re-announced at the ExCel Centre in Docklands in east London, a conference venue more known for dental industry showcases than gigs. Few people who had traipsed there for work were going to want to return for a festival. Would it be any surprise if ticket sales were poor?

On 7 August, ATP posted on its website answering criticisms of the venue, in an apparent last-ditch attempt to boost sales. It pointed out the toilets had Dyson Airblades, so there would be no “broken hand-dryer nonsense”.

Another reason some felt a cancellation was on the cards was ATP’s recent business history. In 2012, the firm’s directors, Barry Hogan and Deborah Higgins, put the company then running ATP’s gigs and festivals into liquidation. That firm owed creditors more than £2.6m at the time. The losses were principally caused by poor ticket sales for festivals.

The directors quickly set up a new firm to run its events, called Willwal Ltd, as well as three other companies to “ensure that ATP will be around for many years to come”. But if the firm kept on running festivals, featuring similar bills to the ones it had previously been putting on, surely there was the chance it would run into similar problems? It stopped doing its traditional events at holiday camps last Christmas, but even an urban festival like Jabberwocky was a risk: last year, it cancelled an event at Alexandra Palace headlined by Grizzly Bear.

It’s been difficult to assess the state of Willwal’s finances under its new structure as the firm has so far only filed one set of accounts, to May 2013. It filed them late, just last week, and they showed the firm had net debts of £15,000 at that time – hardly a great sum. But you did not need to see the full accounts to be concerned. Credit ratings agency reports showed Willwal had received court judgments at least twice ordering it to pay debts. In July, the company handling Jabberwocky’s PR also stopped handling calls about the event, because Willwal owed it many thousands of pounds.

ATP still has 10 concerts listed on its website, including a festival in Iceland next year, headlined by Belle Sebastian. ATP says all of them will go ahead. But will people trust the firm enough to buy sufficient tickets? The company survived its last liquidation with its reputation intact among music fans and bands, as they saw it as a company trying its best, but running into problems. But few fans lost money then. This time, some might. ATP has told fans who bought tickets from a company called Dash to contact it for a refund; Dash is telling people that ATP has their money. “We are very keen to learn where the money has gone!” Dash says in a statement on its Facebook page. It is considering legal action to get the money back.

Update: ATP has now released this statement on their Facebook page:

So, can ATP survive this latest setback? Will you be buying tickets for their upcoming shows? And are you having any luck getting refunds? Please post below.

The only good news to emerge from the cancellation so far is that many of the bands who were meant to play Jabberwocky are trying to arrange alternative gigs. Go here for a list.