Former Blues loanee Luke Garbutt has signed a one-year deal with fellow League One side Blackpool.
Town were keen to bring the 27-year-old, a free agent following his release by Everton, back to Portman Road on a permanent basis over the summer but after the introduction of the League One salary cap cooled their interest and signed Stephen Ward.
Sunderland were also in talks with Garbutt but were similarly hampered by the salary cap.
"I’m pleased to be here and looking forward to working under Neil Critchley,” Garbutt told the official Blackpool website.
"I really like what the head coach had to say when I spoke to him a few days ago, and he was a big factor in my move here. He’s spent the last few years at Liverpool and developed players really well, so I’m looking forward to what the future brings here.
"There’s big plans for this football club and I’m hopeful I can be a big part of what’s to come this season.”
Critchley added: "I’m delighted Luke has joined us for the upcoming season. He will bring experience to a youthful group, and he knows this division well having enjoyed a really successful season in League One last year.
"The fact he has chosen Blackpool over a number of other interested clubs, is a sign of how well the club is progressing.
"During my conversations with Luke, I felt his desire to come to Blackpool. I very much look forward to working with him, as he will be a vital member of our squad this season.”
Garbutt, who joins another former Blue Grant Ward at Bloomfield Road, made 29 starts and one sub appearance for Town during 2019/20, scoring six goals.