McFadden joined Birmingham from Everton in January for £5million but failed to keep the St Andrews outfit in the Premier League.
Now, the 25-year-old is seeking a return to either the top tier of English football or move back to Scotland.
McKay said: "James has told me that he wants to leave.
"He is happy when Alex McLeish gave him an opportunity to play first-team football every week but it's a short career and he wants to play at the highest level."




