Societies allow  companies in default to reorganise themselves and attempt a resolution by allowing to renegotiate and rewrite private contracts under a formal bankruptcy mechanism. This is another reason why the equity holders are mostly wiped out in the bankruptcy of a corporate borrower since they already enjoyed the benefits of limited liability.
While limited liability concept is fundamental for encouraging entrepreneurship and innovation, piercing of corporate veil i.e., disregarding the limited liability and making shareholders personally liable, is not uncommon now-a-days considering the negative externalities created by defaulting firms.