Under the proposal, an injection of £750m of new money would be provided to the company, offering it sufficient liquidity to trade over the winter 2019/20 season and "invest in the business for the future".
In a separate trading update, Thomas Cook said is summer 2019 programme was 75% sold, slightly ahead of the same period a year ago.
Hong Kong-listed Fosun Tourism, owner of the Club Med holiday business brand, is already Thomas Cook's biggest shareholder with an 18 percent stake.
The proposed deal would also give Fosun Tourism a minority interest in Thomas Cook's airline business.
"While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees". A significant amount of Thomas Cook's external debt would also be converted into equity, lighting its debt burden.
The travel group now has debts of £1.25bn compared to a market value last night of about £204mln.
Thomas Cook has commenced talks with China-based Fosun Tourism, a subsidiary of Fosun International, on a £750 million rescue takeover deal on Friday.
Cash-strapped travel firm Thomas Cook, which was founded in Leicester, has said it is in "advanced discussions" with Chinese conglomerate Fosun, paving the way for a sale of its tour operator business.
The 178-year-old company had seen its market value drop from around US$4 billion when it made its debut on the London market in June 2007, as weak demand led to increased promotional activity and earlier discounting than usual.
It is one of China's so-called "grey rhino" companies - along with Wanda, HNA and Anbang - that have come under growing scrutiny in the last few years from mainland authorities wanting to crack down on debt-fuelled foreign acquisitions.
The company said that since announcing a review of its airline business in February, the operating environment in the European travel market had become progressively more challenging.
The British holiday company's tour business had 11 million customers in 2018 and produced £7.4 billion in revenue.
Thomas Cook's recapitalisation proposal, which may comprise a capital injection and new financing facilities, comes a month after it said it was in talks with Fosun following the Chinese firm's preliminary approach.
Fosun said earlier this year that it will adopt an asset-light strategy and run under management contracts the Club Med resorts it plans to launch in China and other countries.