So first the participants play a battle.
So pretending there are 8 people in the tourney,
1 vs. 2
3 vs. 4
5 vs. 6
7 vs. 8
So assuming everyone on the left side won (1,3,5,7) and the rest lost, they will be sorted like this:
Winners Bracket:
1,3,5,7
Loser's Bracket
2,4,6,8
So that way they would have a chance to compete still. Both brackets play the same way as a normal tournament by the way.