Over 800,000 tickets costing up to £1,000 had been sold for fifty dates at London's O2 arena which were hailed as the most "expensive and technically advanced" live shows ever.
The concerts, which were due to start in two weeks' time, had been expected to be the single highest grossing pop production of all time.
Instead US Entertainment giant AEG Live faces insurance liability for at least £300 million amid reports that the company had struggled to underwrite the concerts given Jackson's frail health and history of canceling tours.
The 02 arena, which is owned by a sister company of AEG Live, now faces the prospective of fifty empty nights and the loss of tens of millions of pounds in potential sales from food, programmes and merchandise at the venue.
The announcement of the concerts in March triggered a buying frenzy that crashed the Ticketmaster website as seats were snapped up at a rate of 11 per second.
The majority sold for between £50 and £75 each, but the demand was so great that 50,000 'premium' tickets were put on sale via the secondary agency Viagogo for up to £1,000 each.
Ninety percent of the tickets were bought by British residents, with the others from as far afield as Japan, Dubai and Botswana.
AEG Live said that tickets would be refunded, but it did not make clear how the money would be paid back. The lack of information prompted concerns from fans given how much Jackson's death has cost the company.
Fans who had bought tickets for the Jackson concerts voiced their concerns about getting their money back on the internet site Twitter.
Yesterday it was revealed there had been scepticism among insurance companies about whether Jackson could complete all the shows.
Reinsurance magazine discovered that when AEG Live tried to insure the first ten concerts for £80 million, its brokers found it difficult to get cover because of a lack of takers. It calculated that the total liability stood at £300million.
Editor Jonathan Swift said: 'They did manage to get cover for the first ten dates, but when they expanded it to fifty there was nobody out there who wanted that big a risk.
'The small number of players in the events contingency market were reluctant to get involved because there were obvious concerns about whether Michael Jackson would be able to fulfill his obligations.
'AEG said recently they were going to self-insure if the worst came to the worst and I would say that probably did happen.
'Lloyds of London said losses won't be great amongst their carriers and that indicates AEG could not get cover for all the dates.'
AEG said last month that it had insurance in place for the first 23 days of the concerts.
But Billboard magazine reported that the insurance could be nullified if Jackson died of a pre-existing health condition or if his death was drug or alcohol-related.
Randy Phillips, the head of the AEG who persuaded Jackson to take the tour dates, said last month that the singer had taken a physical and 'passed it with flying colors.'