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It's stopped. It just threw an error while stopping. Happens sometimes. Is there an actual problem?

The error is coming every time i follow this process (drain and k3s stop) . Would like to understand if the process we are following is correct or not. When I use k3s-killall script after drain it simply kills the containerd-shim process and after that I don't see any error while stopping k3s. But we don't want to SIGKILL's the processes. So we are using this approach and would appreciate your guidance.

Yes, if you just stop the service it is expected that it won't exit cleanly. Kubernetes isn't really designed to have everything running in one process like we do and it would take a bunch of invasive changes to get everything to handle shutdown properly just to eliminate some slightly irritating log messages. It doesn't cause any problems, it is purely cosmetic.