City were forced into a transfer embargo after defaulting on one of the payments to The Saints for the £600,000 deal which was set by a tribunal.
Then Southampton hit financials troubles which have seen their parent company placed into administration.
Notts County were due a five figure fee from that deal and another for David McGoldrick took the deal into six figures.
County were planning on legal action but the Football League have confirmed that they will pay them the full sum out of money that they are withholding from the Saints.