No, you still owe the stock, but if trading is halted or the stock's registration is revoked, you cannot close the position. That means that (a) you still owe (daily!) stock borrow fees, and (b) you are still required to keep collateral posted against the shares with your broker (because the stock is not trading, the last posted price can be considerably above zero, so this can tie up a non-trivial amount of money).
In recent memory, this has happened to Longfin Corp. [0], Cynk Technologies [1], China Biotics [2], and surely others. If it does happen before you can close out a short position, that's bad. You can be stuck that way for years [3].
In recent memory, this has happened to Longfin Corp. [0], Cynk Technologies [1], China Biotics [2], and surely others. If it does happen before you can close out a short position, that's bad. You can be stuck that way for years [3].
[0] https://www.sec.gov/enforce/information-longfin-investors
[1] https://www.sec.gov/litigation/suspensions/2014/34-72594.pdf
[2] https://www.sec.gov/litigation/opinions/2013/34-70800.pdf
[3] https://www.barrons.com/articles/getting-caught-short-152306...