Prospective new Birmingham owner Carson Yeung was ready to provide the cash for a such a move after promising manager Alex McLeish £5 million to spend before the transfer window closes on Sept 1.
But Stock Market rules in Yeung's native Hong Kong prevent such action and so dreams of bringing in the Turkish international had to be abandoned.
But McLeish will strive to complete the signing of Sporting Gijon midfielder Michel by Tuesday's deadline, even without Yeung's cash injection.
McLeish said: "In terms of the offer of money [from Yeung], I don't know whether the rules will allow it to happen. I would certainly put it to good use if I could spend it. It would be very welcome.
"But I'm not sure whether the rules which govern such matters will make that a possibility. It would certainly have been good in helping to tidy up the Michel transfer.
"We are still working on that deal and, if he comes here, it will be a much needed boost to the squad. The stumbling block is in terms of the payments, and the way they are made, and we hope to find a solution in the next couple of days."
McLeish insists he will not be able to meet Yeung or any of his representatives until the takeover is completed in the next few weeks.
He is concentrating on getting the best out of his current squad ahead of Saturday's clash with Premier League leaders Tottenham at White Hart Lane.
The former Scotland manager: "I am not at liberty to meet any representatives [of Yeung] until they take over the club. In any case what is the point? It might not happen.
"Once Karren Brady [managing director] and David Gold [chairman] give me the go ahead to do that, then it will happen.
"It is out of my control. It is not something that keeps me awake at night. I am concentrating on keeping the Birmingham fans happy and getting the best out of the players at my disposal.
"I don't know what the timescale is for the takeover, if and when it happens. It is not something that concerns me."
Lee Bowyer has recovered from a knock suffered against Southampton in the Carling Cup win and the midfielder believes he is getting up to speed after missing the start of the campaign through suspension.
Bowyer said: "I didn't get in as many minutes as I would have liked pre-season because the manager understandably was playing the team which would start the season.
"But I felt I did alright during the hour I had against Stoke last weekend and I did better at Southampton. The 90 minutes there will put me in good stead for the weekend and the forthcoming games."
Left-back Gregory Vignal is moving close to fitness after missing the last two games with a hip problem and could be in contention for Saturday's meeting with Spurs.