Fabio Carvalho transfer to Liverpool was imminent just before the close of the transfer window on midnight, Monday.
Liverpool and Fulham had agreed an £8 million ($11m) fee for the 19-year-old on Monday evening, with the lad remaining at the Craven Cottage till the end of the season.
Liverpool has failed in a deadline-day bid to sign Fulham teenager Fabio Carvalho.
Fabio Carvalho to Remain at Craven Cottage
The Reds had agreed on Monday evening and were prepared to allow him to remain at Craven Cottage until the end of the season.
But despite the agreement by both clubs, the transfer fell through because they were unable to complete the necessary paperwork in time for the 11 pm GMT deadline.
It was reported that a medical was hastily arranged in London, and a five-year contract was prepared with Fulham insisting on a loan-back arrangement.
The English Football League does not allow ‘deal sheets’ which allows work to continue on a transfer even after the deadline date, unlike the Premier League.
Carvalho would now see out the remainder of his contract, as he is out of contract at the end of the season and would leave for free.
The Merseyside Reds will hope to get their target in the summer but would expect fierce competition with the likes of Bayern Munich, Borussia Dortmund and Chelsea who are also reported to be interested in the England U19 player.
Liverpool will however try to finalise a deal in the coming weeks, with Jurgen Klopp believing he is a player with significant potential for the future who would develop well on Merseyside.