Danny Wilson
Wilson (centre left) returns to Liverpool after his proposed move to Hearts collapsed. (Reuters)

Defender Danny Wilson will return to Liverpool after his proposed move to Hearts fell through due to the Scottish club entering administration.

The former Rangers prospect had agreed a three year deal in principle to join the Tynecastle club when his Liverpool contract expired at the end of this month.

But due to the financial woes consuming the SPL side, Hearts have been forced to pull the plug on the move and cancel his proposed permanent deal after the 21-year-old spent last campaign on loan with the club.

"Danny Wilson is still a Liverpool player and because we have an embargo we now cannot sign him which is very unfortunate for me," manager Gary Locke told STV.

The centre half will remain on Liverpool's books until the 30 June when his deal expires. Given Liverpool's willingness to allow him to negotiate a move to Hearts last month, the Reds are unlikely to offer him a new deal, allowing him to become a free agent from next month.

Liverpool paid an initial fee of £2m in the summer of 2010 for the once-highly rated Wilson, who made his Champions League debut for Rangers at the age of 17.

But after making a handful of appearances under both Roy Hodgson and Kenny Dalglish he failed to impose himself on the first team squad and was sent out on loan to Blackpool and Bristol City, before joining Hearts on an end of season loan deal last January.

Hearts, who have club debts in the region of £25m, are banned from registering new players for their failure to pay this month's wages, a ruling that will remain in place until their period of administration subsides. The SPL side were also handed a 15 deduction.

Liverpool meanwhile are close to sealing a £6.8m deal for Sevilla youngster Luis Alberto. The 20-year-old is due to undergo a medical this afternoon and agree personal terms with the club.