Palace and Liverpool had agreed a £35m deal for Guehi following his man-of-the-match performance in the win at Aston Villa on Sunday and was even handed permission to complete a medical on deadline day.
Guehi even made an exit video commemorating the England international's time at Palace which was leaked when Palace failed to land Igor Julio and denied Guehi his dream move. Now, speaking to talkSPORT, the former Palace boss revealed how he feels bad for the young defender who has a lot of potential.
"I found him an outstanding individual, not just an outstanding footballer. That's been shown quite clearly during this long, drawn-out saga.
"He's the person I feel really sorry for because if right at the beginning it had been made clear his task ahead would be to stay at Crystal Palace and there'd be no question he'd be leaving in the transfer window, then I'm sure he would have got his head around that.
"But having been led to believe sooner or later a deal would be done between the clubs, I guess that his head for the last period of time has been he was going to move. He's the loser in the situation.
"I think the transfer situation could have been sorted out much quicker between both clubs."
A deal sheet was then submitted to the Premier League to take the Guehi negotiations beyond Monday's 7pm deadline. However, Palace then ultimately decided not to sell due to Julio’s collapsed deal which now keeps Guehi at the side until January at least.
The Times has are reporting that Guehi is currently planning to leave Palace as a free agent next summer and will not sign an extension to remain at Selhurst Park which has left many asking why the deal could not have been pushed through sooner.