Example: Alice has a long futures position worth 0.3 BTC. The BTC price is 33,330 USDC, the collateral for this position is 1,000 USDC. Alice's margin is 2,100 USDC and uPnL is -1,105 USDC. kM equals to (2,100 + (-1,105)) / 1000 = 0.995. Alice's position can not be liquidated, but she cannot open new positions either.
The BTC price drops to 31,990 USDC, Alice's uPnL becomes -1507 USDC, collateral equals to 959.7 USDC, and margin remains 2,100 USDC. kM equals to (2,100 + (-1507)) / 959.7 = 0.618.
Bob's margin account is 200 USDC. For Alice's kM to be equal to 0.7 or higher, her collateral must be reduced to 783.755, so 0.055 BTC can be liquidated. Bob liquidates 0.055 BTC of Alice's position and gets her uPnL, the amount of funds from Alice's margin equal to uPnL, as well as a fine of 1.5% or 26.4 USDC. 17.59 USDC of Alice's funds is sent to the insurance fund.
Bob's position is: long 0.055 BTC, his collateral is 175.95 USDC, uPnL is 276.28 USDC, margin account balance is 520.27 USDC, so kM = 1.39. Bob can close the position or continue holding it.