Smartphone Questions? Ask A Smartphone Technician for Answers
No, the phone can still be wiped and reset as new, however the information stored on it will be deleted as decryption is impossible.
Ok, if the phone was triggered as lost in Find my iPhone, then it won't activate regardless of what action you take.
If the person did this maliciously then you should demand that they provide the unlock code or pursue them for the loss of the phone.
If entering the code for person A or person B doesn't work, then the user cannot unlock it but the phone can still be reset at an Apple store.