Did you check with the brokerage?
I suspect that in these situations the broker either does not know what it is doing, or are taking 'advantage of the situation' to continue to charge the short seller the rebate on shares that no longer exist.
I tried to find some rules or regulations detailing how this situation is supposed to be handled but have found nothing yet.
The way it should be looked at, is whoever originally loaned the shares to you will have the shares removed from their account overnight, so there is nothing to return. In the same manner, the short position you have should be deleted also at the same time.
It also seems that the DTC should be following the FINRA notice on the delisting order, otherwise what if the company was dead and never issued any directions to anyone, how can a short position stay open when the original owner of the shares has nothing?
You might need to talk with someone on the phone at your broker and get them to call their trading desk to do something if they do not automatically close the short position. As an example, I had a strange situation a few years ago where I bought 100,000 of a small oil company at $0.05. It was a Canada company that had a listing on the OTC. I bought it as an investment since the company was trading for less than net cash. A few weeks later the stock jumped to $0.08/$0.09 and I put in an order to sell the 100,000 shares at the bid of $0.08. Now the strange part. My block sat on the bid all day and never sold. In addition, zero shares traded, including by block on the bid. (As a side note, I did NOT have the order as an all or none.) For whatever reason, the market maker did not do the trade. I sent a message the next morning to the broker explaining the situation, and before the market opened for the day my broker executed the trade. No explanation given but I assume that someone made a mistake and the broker fixed it for me or took care of it with whoever was on the other side of the trade.
As an additional side note, you can press for them to explain why there should be any interest charged to borrow shares that do not exist.
Louis J. Desy Jr.
