Smith, also owner of Sheffield Steelers, confirmed a grievance had been registered with the EIHL by McKay, whose CV includes work with Toronto Maple Leafs and New Jersey Devils.
Today, Monica Moody, one of the owners of MKL, initially told The Star funds were owed to the coach but then said the matter was under scrutiny.
The EIHL is keen to present a position of stability and unity after last year's loss of Edinburgh Capitals from the top flight.
Details of McKay’s position confirm all has not been well at the EIHL’s bottom club, who last week stated they were stable but would not be investing in the team until next season.
Last year, MKL had publicly announced McKay was leaving his role for "personal reasons" and the local press reported that he had "resigned from his post."
But McKay, who was appointed on February 2018, was in fact fired from what he claims was a "guaranteed contract with no less than 40 weeks of salary per season."
The Canadian, 65, claims his work over last Summer, researching and recruiting the MKL team, was never reimbursed.
He says his visa and other expenses were never met by the club.
"My wife and I paid for my visa, healthcare surcharge, skates, flight from Europe to Canada in April 2018 as well as all recruitment related expenses and we haven't been reimbursed,” he said.
"I worked from April to September recruiting a whole new team, within a relatively small budget. I expected weekly payment over the summer but didn’t receive any. I challenged this and was told I would be paid on my arrival. On arrival, I didn’t get the nine weeks owed. In my first week in MK all the players received their weekly salary, I didn't receive mine."
Eventually, he says, he started getting paid, but then went to visit his parents on a mini-break in Toronto where he learned he had "summarily and instantly dismissed due to gross misconduct."
McKay denies any misconduct at the Buckinghamshire club.
After that, McKay said negotiations were started over the repayment of money he was due. On one occasion, he flew from his home in Italy for a scheduled meeting with Mrs Moody: "She said she would meet us to pay an instalment but never showed up.
"It is frustrating and very disappointing to have researched and created a team, starting managing them...and then being fired and not being paid for doing that work. This isn't about whether I am a good coach or manager or my experience and background, this is about Doug McKay getting the money pursuant to a signed guaranteed contract."
When contacted by The Star, Mrs Moody initially agreed that money for McKay was outstanding, but said he "would have to wait."
In a second phone call, Mrs Moody said the situation was clouded by the "gross misconduct dispute."
She said: "There are consequences to his behaviour...this will all have to be resolved legally.
"We owe him some money but he owes me for what he did - but I can't go into that."
Asked why McKay's visa wasn't reimbursed, Mrs Moody said that if you did not work in the ice hockey industry outsiders would not know what specific details were in contracts and added that she was under no legal obligation to pay some costs until the legal situation was cleared up.
"For it to have been a gross misconduct something substantial must have happened as we are not likely to have taken a decision to imbalance the team."
She said what had happened had created a "massive negative impact on the whole season."
Mrs Moody added she and her husband Graham would run a more harmonised club next season, and said they would develop with the help of former Steeler Tim Wallace.
Smith, whose Sheffield player Cole Shudra is on a season-long loan at MKL, said he was aware of McKay's grievance, commenting: "We have had contact with Doug, he's complained that there was an outstanding issue with MKL.
"We are waiting to hear back from the club.
"This is an employment issue but we have asked MKL for a response to what he has said and we are awaiting that formal reply."
Smith said he could not comment on McKay's allegation that the costs he spent on a visa have been reimbursed.
Asked whether players at MKL had, at certain times of the season, had to wait to be reimbursed he said no Lightning players had complained to the EIHL.
"All our players (at Sheffield) are reimbursed almost immediately, I don't know the situation at MK."