Trevor Birch, who is attempting to stave off the threat of liquidation at Pompey, has warned that the club will go out of business unless they can cut costs.
High earners such as Kanu must be taken off the wage bill if the South Coast outfit are to survive.
Portsmouth are looking for the 35-year-old to waive his rights to the £3million he claims to be owed.
The Nigerian striker is understood to be willing to walk away from Fratton Park, but has made it clear that he wants a suitable settlement put in place first.
"The administrator has treated Kanu as an imbecile by making ridiculous proposals that he should give up his entitlement and walk away," said his agent Samuel Okoronkwo.