The Scottish Football Association have confirmed they have agreed compensation with Rangers following the departure of national team manager Walter Smith to Ibrox.
The SFA had threatened legal action against both Rangers and Smith after the veteran boss resigned from his post to return to the Glasgow club last week.
However, a settlement - believed to be £400,000 - has been agreed between the SFA and Rangers, meaning no further action will be taken.
The football governing body are now in the process of searching for a new national team coach ahead of European Championship qualifiers against Georgia and Italy in March.
Smith enjoyed a successful spell as national team coach, taking Scotland to the top of a Euro 2008 qualifying group, which also includes World Cup finalists France and Italy.
And SFA chief executive David Taylor revealed finding a suitable replacement was high on the agenda at today's board meeting at Hampden.
He told Sky Sports News: 'First of all, we agreed to accept the compensation offer from Rangers regarding the departure of Walter Smith. That matter is now settled, it is now closed.
'We moved quickly on to discuss the new national team coach. What we needed to do was draw up a short-list and that is what we have done.'
Alex McLeish, Tommy Burns and Gary McAllister have emerged as the front-runners for the job.
'It's a short-list, that's all I'm prepared to say,' Taylor said. But the SFA chief did confirm the new national team manager will be a Scot.
Taylor added: 'Yes, I can confirm that at this stage. We said earlier that there was likely to be a preference to go for a Scottish manager at this point. That is what we have done.'
Meanwhile, the SFA have confirmed Scotland's European Championship qualifier against Italy will take place in Bari on March 28.
The match will be in the 58,000-capacity Stadio San Nicola, the home of AS Bari.
No decision has yet been made on how many tickets will be provided to Scotland.