I hate this derivative nonsense for the sake of "risk management" and balancing books. Betting for companies to fail, putting a real-world incentive out there for it to happen, is just bad business and an ugly look for modern finance. I hate it here.
Actually short sellers are using derivatives. People can short effectively by using options but a true short seller is selling the stock then looking at buying it back at a later date. It is nothing more than a loan.
And shorts are necessary for price discovery. Someone putting on a short might not betting on the company to fail. Instead, it is a bet the price of the stock will go down.
Stock prices go up and down all the time.