Correct once the short seller has covered, typically naked short selling is designed to never cover. So years can go on with a larger than authorized share count for which if significant management would be aware of when they send a proxy type notice. The transfer agent would be aware of more shares held than exist. SRSR has said that wasn't the case here.
If the shares are borrowed then those shares are hypothetically out of circulation. In a vicious bear market shares become scarce to borrow as in 2008. http://cij.inspiriting.com/?p=984#
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