The 24-year-old moved to Easter Road last summer but could now be on the move again with npower Championship side Blackpool reportedly offering £250,000 for his services.
Fenlon, who is currently overseeing his side's tour of Europe which will see Hibs play four friendlies in eight days in Holland, Belgium and Germany, has admitted talks are ongoing and that any transfer funds will hopefully be invested back into the playing squad. "They (negotiations) are under way, we are talking to a club at the moment," he told Hibernian TV.
Fenlon added: "It is well documented at this stage so we are down the line on that. It is not concluded by any stretch of the imagination. Ossy has made it clear he would like to go back down the road so from our point of view we need people who are committed here and people who want to help us and improve us.
"I understand from his point of view that he wants to get closer to the family. It maybe gives us more finances to get someone else in. It is a situation that has developed over a short period of time but something we can get to the end of very, very quickly."
One player who appears to be closing in on signing for Fenlon's side is defender Alan Maybury. The 33-year-old left St Johnstone when his contract expired and has been training with Hibs with Fenlon hoping to add him to the ranks.
He said: "I think he brings a wealth of experience and knowledge of the game. He ticks all the boxes in fairness to him and he is a good player as well which is a plus for us, he can cover some positions. There is a lot that Alan can bring to the table - he is great to have around the place."
With the weather in Scotland decimating several pre-season fixtures Fenlon has been playing up the idea of an overseas tour as his side prepare to face Lierse SK on Wednesday night.
"It gives us time to work on what we want to do in relation to the team. There are some new players here so it helps us get used to each other, some young boys as well have come into the squad and they pick up good habits," he said.
"In general it is not just what goes on on the park, it is off the park that is important when you get to pre-season with new players and young players coming into the squad so it is about trying to gel that together and get the philosophy of what we want from them over the course of the season."