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Second-choice keeper Alvarez, who has featured twice in La Liga this term, suffered knee ligament damage in May and is not expected to play again in 2019-20.
Following confirmation of his absence, Celta were given the go-ahead to complete an emergency signing outside of the transfer window, providing the player was already playing in Spain or a free agent.
While most would have expected Celta to bolster their goalkeeping options in light of losing Alvarez, they have taken an altogether different route.
Former Spain international Nolito, a wide attacker, returns to the club where he spent three years up to 2016, reportedly agreeing a deal that keeps him in Galicia until the end of the 2020-21 campaign.His Sevilla contract was set to expire at the end of the month.
A statement on the Celta club website said : "The new reinforcement for the final section of this season could not arouse greater joy.RC Celta and Sevillahave reached an agreement for Nolitoto immediately join the club,pending the relevant medical examinations and finalisingcontractual details."
La Liga has attracted criticism for allowing Celta to use the emergency signing protocol to hire a forward instead of a direct replacement for the player who was injured.
Celta are currently just two points above the Liga relegation zone. They face Alaves on Sunday, where Nolito could make his second debut for the club.
It is the first of nine remaining matches for Celta in La Liga, with the Spanish top flight set to resume following a three-month hiatus due to the coronavirus pandemic.
Nolito enjoyed a succesful three-year spell with Celta before moving to the Premier League with Manchester City. He failed to impress in England however, and returned to Spain at the end of the 2016-17 season to join Sevilla.