Last week, Atletico agreed a €40 million (£34.5m) deal with Chelsea to sign the England international.
Chelsea had also reached a separate agreement with Atletico which would have seen them pay €40m (£34.5m) to sign 20-year-old striker Samu Omorodion.
However, Chelsea’s deal for Omorodion collapsed over the weekend as the forward, who scored eight goals in 35 appearances during his loan spell with Alaves last season, rejected the Premier League club’s demand to include 50 per cent of his rights as part of the agreement.
Omorodion was unhappy with the proposal and is now unwilling to join Chelsea, which leaves Atletico without enough funds to complete deals for both Gallagher and Manchester City forward Julian Alvarez, who arrived at the Wanda Metropolitano on Monday afternoon to finalise his £81.5m transfer.
Chelsea are now attempting to strike a new agreement with Atletico for Joao Felix, who has already indicated that he would be willing to return to Stamford Bridge and take a pay cut in order to push the move through.
According to Marca and Relevo, both Chelsea and Atletico are unwilling to see the deal for Gallagher collapse and the two clubs are working towards a resolution.
Gallagher, who has been in Madrid since Thursday, has also signed his contract with Atletico and wants to make the move to La Liga.
When asked about Gallagher’s situation and the reports which claimed that the midfielder, who has been at the club since the age of eight, has been told he is surplus to requirements, Chelsea manager Enzo Maresca said last week: ‘Nobody is going to be a regular starter because if I say someone is going to be a regular starter, I think it is a lack of respect.
‘For them, they need to work day by day very hard and show me and convince me they are to play but nobody knows.
‘In this moment, there is something between the club and the player; an agreement to stay or to leave. These kinds of things happen in every club, every summer and in the end the final decision will be good for everyone. Hopefully the final decision will be good for Conor and the club.’
Felix, meanwhile, spent five months at Chelsea last year, while last season he scored 10 goals in 44 appearances during his loan spell with Barcelona.
The Spanish club, who finished 10 points behind champions Real Madrid in La Liga last term, were keen on signing Felix on a permanent deal.
However, Barca have been restricted in the transfer window once again due to their financial situation.
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