The two clubs agreed an undisclosed six-figure fee for the 23-year-old Danish defender but he has not been able to sort out personal terms.
Bischoff, who has played one first team game in 3 seasons since signing for £750,000 from AB Copenhagen during Kevin Keegan's reign, will now attempt to resurrect his City career.
He has just one year left on his City contract so will become a free agent next summer.