Insolvency occurs when an individual or a firm is unable to meet their financial obligations. Insolvency is not a synonym for bankruptcy, which is a determination of insolvency made by a court of law resulting legal orders intended to resolve the insolvency. Insolvency can lead to insolvency proceedings, in which legal action will be taken against the insolvent entity and assets may be liquidated to pay off outstanding debts. This regulation establishes common rules regarding the court competent to open insolvency proceedings, the applicable law and the recognition of the court’s decisions for cases where a debtor, whether a company, a trader or an individual, becomes insolvent. It is aimed at dissuading the debtor from transferring assets or the judicial proceedings from one country to another in order to improve legal position.