Solicitors for both clubs were seeking common ground for a compensation payment which would soften the latest blow for Leicester after the loss of a second manager in a year.
Brian Little resigned for "personal reasons" last November and shortly afterwards joined Aston Villa, who eventually agreed an out-of-court settlement with the Filbert Street club.
Chairman Martin George had originally asked Villa for pounds 1.5million for Little, but the eventual figure was never made public.
McGhee left Reading for Leicester last December, and was on course to give the club a Premiership return until his walk-out last week after speculation linking him with the vacancy at Wolves.
George says he has rejected the resignation, but the likes of Mike Walker, Trevor Francis, Lennie Lawrence and Russell Osman are already being linked with the Leicester job.
Manchester United's big guns are on the way back, meanwhile, with two of Saturday's missing six set to face Celtic in Paul McStay's sell-out testimonial in Glasgow tomorrow night.
Goalkeeper Peter Schmeichel has recovered from surgery on his inflamed elbow and Ryan Giggs should be fit after missing the last two Premiership games with an ankle injury.
Gary Pallister is having treatment to his back injury, Roy Keane is still not ready to play, Denis Irwin is with the Republic of Ireland and Nicky Butt is suspended, but manager Alex Ferguson is taking all available first team members to Glasgow.
The United boss is hoping to use the game as preparation for Sunday's clash with Liverpool at Anfield and expects a competitive match.
"It'll be passionate, because they are Scottish, and they'll be trying like nothing on earth to beat us," said Ferguson. "But that is nothing unusual. It is a game between two great clubs and, hopefully, it will be a really good night. Ferguson added: "Paul has been a great servant to Celtic. He's been a fabulous player for them, and I hope we can make it a really good night for him."
Celtic manager Tommy Burns paid tribute to his captain. "It's good to see a player like Paul getting his just reward because he was at the club when it went through a barren spell and I feel he is the better for it, both as a man and as a football player," said Burns.
"Over the last couple of months he has gone from strength to strength."Reuse content