South Sydney's task to open up salary cap space for Sam Burgess' return has become trickier after Penrith passed on an offer to snap up Rabbitohs back-rower Chris McQueen.
The NRL has reportedly refused to register Burgess' contract because Souths are over the cap for 2016 despite releasing Dylan Walker on Thursday.
McQueen is off contract at Redfern at the end of next season but has been shopped around to rival clubs.
Gold Coast passed on his services last week, but he remains a chance of heading to the Titans after Panthers supremo Phil Gould said McQueen wasn't wanted at the foot of the mountains.
"We've withdrawn from discussions with Chris McQueen. Genuinely nice bloke & quality player but not in our budget," Gould wrote.
The Rabbitohs have reportedly been told by the NRL they will have to shed further players and McQueen's exit could have opened the door for Burgess' three-year deal to be officially ratified.
However the Panthers's decision to pass on McQueen leaves both he and Burgess in limbo.