City's chairman, Bryan Richardson, has questioned the commitment of the 36-year-old player, who has one year of his contract to run in his second spell with the club.
Gillespie, who rejoined the Sky Blues on a free transfer from Celtic two years ago, has been effectively barred by the club since the start of the season.
Richardson said: "Gary was taken on at the club to play alongside the youngsters in the reserves, but has been permanently unfit. He was even unable to train with the youngsters, so his value to the club was severely diminished.
"In our view, he could still have been of value if he had expressed a wish to get involved in coaching the youngsters, but that was not the case.
"I was very disappointed because I, as much as anyone, had brought him back to Coventry. But he showed no inclination whatsoever to take up his responsibilities. He didn't show any interest.
"This time round it was a case of taking the money and, as far as I am concerned, I want people who will put something back.
"We made him an offer which he rejected, and he had the chance to go to Swansea as assistant to Jan Molby or to Wigan, but also declined those opportunities."
Gillespie, who made 172 league appearances in his first spell with Coventry but only three since rejoining the club, was unavailable for comment yesterday.
Richardson has also threatened a clear-out if the club's current crop of players continue to fall short of expectations. "We are not in the business of collecting players, we are in the business of producing a successful football team.''Reuse content