The Reds were due to pay around £2m to ADO Den Haag for the 24-year-old, described by Steve McClaren as 'a wide player who can play on either side, who delivers a great cross' and who the City Ground boss believed would provide the creativity that his side are lacking, as highlighted by Saturday's goalless draw against Barnsley.
Verhoek, who has been with Den Haag for the whole of his professional career to date, making over 150 league appearances for the club, pulled out of the deal for personal reasons, saying he wanted to remain in Holland.
McClaren is now waiting on talks between Forest and West Brom striker Ishmael Miller after a fee was agreed between the two clubs for his services.