[midasuni]

So if two people owned one share, they could simply pass it between each other until their shorts are covered?

[treis]

Not exactly, but yes. A single share can theoretically unwind all of these short positions. If we have

A lends to B who sells to C who lends to D who sells to E who lends to F who sells to G.

The reverse of the process will unwind it:

G sells to F who returns to E who sells to D who returns to C who sells to B who returns to A

[bluGill]

It doesn't even have to be reverse. It can be G sells to C who sells to F->A->E->B->D just to make up a random order.

[ScoutOrgo]

Not passed, but bought since the underlying price will have changed.