For the sake of argument, let's assume a scenario, where the company is very illiquid, and there are no shares for sale and even increasing the buy order doesn't produce sellers. What happens to the short seller, who wants to cover his short position in this scenario?
Or a second scenario: A company like Tesla goes private. The short sellers are not able to buy enough stock in time and they end up unable to cover their short positions.
Does something like this need to be settled between the lender and the shorter or is there a mechanism for this type of situation?