How would you deliver bad news to your team members?
Good news and bad news, both are part and parcel of any organization. There cannot be one without the other. The interviewer might ask you this question just to make sure that you are capable of delivering bad news without hampering work efficiency.
You need to assure the interviewer that you understand bad news is a part of the whole job process. In order to deliver bad news, it is best to gather your whole team together and explain what has happened.
You need to assure the interviewer that you can be empathetic while carefully explaining why this situation happened, what steps you have decided on to curb the effects of this bad news and also be strong during the whole period while taking feedbacks from your teammates as to how you could’ve stopped/predicted the bad news from happening.