Banter and General Comments, page-13264

@NewLogic ponders "I wonder what happens to the owner of borrowed shares if the short seller becomes insolvent and unable to close the position"

The borrower lodges collateral, so the stock loan is secured. The borrower can use cash, typically around 105% of the value of the stock borrowed. Whether under PB or securities lending agreement, the security is updated daily, so that means if the stock price doubled, then the borrower would have to lodge another $105 on top of whatever they originally lodged as collateral. The daily margining means that the stock lender's credit exposure is limited to the "jump", but since the value of the collateral exceeds the value of the loan, there is some protection afforded by the buffer. It would be long and drawn out process to untangle if the short seller went into administration or receivership, but at least the lender has the collateral.