The Latics had accepted a £7 million offer for the 26 year old Scotland international midfielder but a payment arrangement couldn't be found and the move has now collapsed.
In the meantime Leicester have completed the signing of free agent and former Inter Milan player Estaban Cambiasso.
This move has called Uwe Rosler to suggest that Leicester were using McArthur as he said: "The chairman [Dave Whelan] made a decision to accept a bid from Leicester in terms of valuation but we didn't accept the pay structure of the deal.
"Then Leicester left James McArthur in limbo. It's very difficult for us to understand. I feel sorry for James. I think James got used in a way. We and James have to live with that. Now we have to make sure we get James right again.
"James hasn’t trained for the last couple of days, he will be at training today.
“James is a fantastic player and a fantastic person and I told him I would never have sold him but it got to a level where the chairman made a decision.”
Stuck in the middle is a great player and very professional footballer who deserves better from both his current club in terms of the public transfer dealings and also Leicester for their treatment of the deal.
Crystal Palace and Burnley are also interested in the player and it is unclear if there will be any developments with either club in the remaining hours of the transfer window.