Valuation Under IBC Guide 2025: Methods & Compliance

Valuation under IBC (Insolvency and Bankruptcy Code) is a critical step in the resolution process of financially distressed companies in India. As per the IBC 2016 framework, accurate and compliant valuation helps determine the true worth of an insolvent business and provides a foundation for resolution plans, liquidation, or asset restructuring.

In 2025, regulatory expectations around valuation under IBC have become more stringent, with appointed registered valuers expected to adhere strictly to guidelines from IBBI (Insolvency and Bankruptcy Board of India). Understanding how this valuation is conducted—along with key compliance requirements, report structures, and legal implications—is essential for insolvency professionals, RP/IRPs, and stakeholders in the resolution ecosystem.

This comprehensive guide offers a step-by-step overview of the IBC valuation process, the roles of registered valuers, applicable valuation methods, and common pitfalls to avoid. Whether you’re a company facing insolvency or a professional navigating corporate distress, this article will help you comply with IBC mandates and ensure a fair, transparent, and defensible valuation.

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This guide has been refreshed with the latest IBC amendments, NCLT case studies, and valuation practices relevant to 2025.

Valuation under the Insolvency and Bankruptcy Code (IBC) plays a crucial role in determining how creditors, investors, and resolution applicants approach distressed companies. In 2025, the valuation process has gained even more importance as NCLT benches emphasize transparency, compliance, and the use of certified valuers.

Whether you are a lender trying to safeguard recovery, an insolvency professional preparing resolution plans, or an investor evaluating opportunities, an accurate valuation can directly influence outcomes. This updated guide explains the valuation process under IBC, highlights key differences between fair value and liquidation value, and shares recent case examples from 2025 to help you understand how these principles apply in real-world situations.

Regulatory Framework and Process of Valuation under IBC

Valuation under IBC is a structured process guided by legal provisions and regulatory oversight. This ensures that the valuation exercise is objective, transparent, and in the best interest of creditors, stakeholders, and the insolvency resolution process as a whole.

Legal Basis: IBC 2016 and IBBI Valuation Guidelines

The Insolvency and Bankruptcy Code, 2016 (IBC) and guidelines issued by the Insolvency and Bankruptcy Board of India (IBBI) form the foundation for conducting valuations in insolvency cases. As per IBBI norms, two registered valuers must be appointed to independently determine the asset values.

Valuers are required to estimate:

• Fair value is the anticipated amount an asset would fetch in a well-structured deal between informed and willing parties in the market.
• Liquidation value represents the estimated proceeds from selling assets separately during the winding-up of a business.

These two values play a crucial role in shaping the resolution plan and expectations of creditors.

Read more : Business Valuation 7: Essential Concepts and Terminologies Explained

Appointment of Registered Valuers

During the Corporate Insolvency Resolution Process (CIRP), the Resolution Professional (RP) is responsible for appointing two IBBI-registered valuers within seven days of their appointment.

Valuers must possess the necessary qualifications, maintain objectivity, and have no vested interests in the outcome. Their reports serve as critical documents for:

• Evaluating resolution plans
• Calculating haircut percentages
• Supporting litigation or appeals, if any

RNC. is a highly respected firm in the valuation industry, known for its trusted expertise across various asset classes, including plant & machinery and land & building and financial securities.

When a business is undergoing insolvency proceedings, revenue alone isn’t enough—valuation under IBC follows a different set of compliance rules and professional standards. Learn how IBC affects valuation.

Steps in the Valuation Process

Valuation under the IBC generally follows a series of structured steps:

1. Asset Classification
   Assets are categorized based on their nature, typically as tangible (like machinery and buildings) or intangible (such as brands and goodwill).
2. Site Visit & Data Collection
   Certified valuation professionals physically examine the company’s location, assess its assets, check documentation, and ensure all information is correct.
3. Application of Valuation Methods
   Depending on the nature of the assets, valuers apply one or a combination of the following methods.:
   • Market Approach
   • Cost Approach
   • Income Approach

These steps ensure consistency and objectivity, which are essential when multiple stakeholders rely on valuation reports for financial and legal decisions.

While the Net Asset Method is ideal for asset-heavy businesses, it’s important to understand how valuation under IBC is handled in insolvency scenarios

Read more : Net Asset Method for Share Valuation

Key Valuation Methods Used in IBC Cases

When a company undergoes insolvency under the IBC, determining the right value of its assets is crucial. Valuers use three primary methods, depending on the nature of assets and availability of financial data. Each method serves a specific purpose and can directly impact outcomes like bank valuation, resolution planning, and asset restructuring.

 Market Approach

• This method involves evaluating an asset by comparing it to similar assets that have recently been sold in the open market.
• It is commonly used for real estate, equipment, and securities where active market data is available.
• Best suited when reliable transaction data exists and assets are not unique or highly customized.

Cost Approach

• Calculates the asset’s worth by estimating the replacement or reproduction cost and then deducting depreciation.
• Best suited for assessing the worth of custom-built equipment or recently developed properties.
• Often used when market comparables are not available or assets are not frequently traded.

 Income Approach

• This approach evaluates an asset’s worth by discounting its anticipated future income to reflect its current value.
• Most suitable for income-generating businesses, especially during bank valuation or investment assessments.
• Requires reliable financial forecasts and appropriate discounting techniques.

✅ Valuers often apply a combination of these methods to arrive at fair and liquidation values, ensuring a balanced and justifiable estimate as required under the IBC.

Need IBC Valuation Support? RNC is a Registered Valuer with IBBI and has executed 100+ CIRP assignments. Book a consultation

Read more : Valuation of Goodwill in Mergers and Acquisitions: Approaches, Challenges, and Best Practices

Common Challenges in Valuation Under IBC

Valuation under the Insolvency and Bankruptcy Code (IBC) is a critical step in the corporate resolution process—but it’s not without challenges. Inaccurate or inconsistent valuations can lead to disputes, delays in the resolution process, and even rejection of resolution plans. Understanding these challenges helps businesses and professionals better prepare for compliance and fair outcomes.

Here are several major obstacles frequently faced during the valuation process governed by the IBC:

Inconsistent Asset Documentation

Many companies under insolvency struggle with outdated or incomplete asset records. Missing invoices, inaccurate inventory data, or lack of proper asset tagging can make it difficult for registered valuers to assess true value. This directly affects both fair value and liquidation value calculations.

Lack of Cooperation from Management

During CIRP, company management may be uncooperative—either due to fear of scrutiny or lack of understanding of the process. This hinders site visits, delays data sharing, and results in a less reliable valuation report.

Subjectivity in Assumptions and Data

Valuation, especially using the income approach, involves judgment-based estimates like projected cash flows, discount rates, and market conditions. When such assumptions are not supported by solid data, it can lead to valuation gaps and disagreements among stakeholders.

Leading Valuation Providers and Tips for Selecting the Best Fit

When it comes to insolvency proceedings under the IBC, choosing the right valuation firm can significantly impact the resolution process. The best valuation firms not only ensure compliance with IBBI guidelines but also bring domain expertise, transparency, and timely execution—making them a key asset for resolution professionals and financial institutions.

Key factors to consider when choosing a valuation partner for IBC-related assignments include:

• Certified by IBBI to conduct valuations across all three asset classes: Plant & Machinery, Land & Building, and Financial Securities.
• Track record in handling CIRP and liquidation assignments
•  PAN-India presence to conduct valuations across locations
• A group of credentialed valuation experts possessing deep sector-specific experience.
• Established processes and documentation standards that comply with regulatory requirements.

RNC Valuecon LLP : A Distinguished Expert in Valuation Services Aligned with IBC Regulations

RNC Valuecon LLP (RNC) is widely recognized among the best valuation firms for IBC-related assignments. With over 30 years of experience, RNC has supported some of the largest insolvency cases in India, including IL&FS, Reliance Communications, and Suzlon.

They offer:

• Full-spectrum valuation services across asset types
• Registered Valuer Entity status with IBBI
• Well-established operations across major commercial cities such as Mumbai, Delhi, Ahmedabad, and Gurugram.
• Industry-specific valuation expertise in sectors like manufacturing, infrastructure, telecom, and pharmaceuticals

Whether you’re a resolution professional, financial institution, or creditor committee member, working with valuation experts in Mumbai like RNC ensures accuracy, speed, and regulatory alignment—all critical for successful resolution under IBC.

Case Examples: Impact of Accurate Valuation in Insolvency

Accurate valuation can make or break the outcome of an insolvency resolution process. When asset values are estimated precisely, it builds trust among creditors, attracts serious resolution applicants, and ensures equitable recovery for stakeholders. Let’s look at real-world cases where valuations played a pivotal role under the Insolvency and Bankruptcy Code (IBC).

 

Case Study

A mid-sized steel company admitted under CIRP in 2025 had assets valued using both income and asset approaches. The certified valuation report helped lenders recover 72% of outstanding dues, while bidders gained clarity on fair value. Without the valuation, bids would have been far lower.

IL&FS Group Resolution

One of India’s largest insolvency cases, IL&FS, involved over 85 group companies and massive inter-company debt. A detailed and accurate valuation helped categorize viable entities and plan their revival, while others were guided into liquidation. The process enabled informed decision-making for financial creditors and led to a structured resolution path.

Reliance Communications

In the insolvency proceedings of Reliance Communications Ltd., accurate valuation reports helped assess assets worth thousands of crores across telecom infrastructure, real estate, and subsidiaries. This transparency was vital in evaluating competing resolution plans and determining fair recovery for lenders.

Conclusion

Valuation under IBC is not just a compliance requirement – it is the foundation on which successful resolutions are built. An accurate assessment of fair value and liquidation value ensures that creditors recover what they deserve, resolution applicants can make informed bids, and investors gain clarity before committing capital.

As seen in recent 2025 NCLT cases, the credibility of the valuation report often determines the speed and outcome of the insolvency process. With evolving regulations, strict deadlines, and the need for transparency, working with an experienced, registered valuer has never been more important.

👉 Looking for expert support with valuation under IBC?

At RNC Valuecon LLP, our IBBI-registered valuers deliver fair, compliant, and defensible valuation reports trusted by lenders, insolvency professionals, and NCLT.

📅 Book a Consultation today and ensure your IBC valuation is accurate, compliant, and investor-ready.

FAQs on Valuation Under IBC :

1.Why is valuation important under IBC in India?

Valuation ensures fair asset pricing, protects creditors, and supports resolution professionals in CIRP. Without certified reports, bids and recoveries may be inaccurate.

2. Who can conduct valuation under IBC?

Only IBBI-registered valuers are authorized to conduct valuations under the Insolvency and Bankruptcy Code in India.

3. Which methods are used for valuation under IBC?

Typically, the Income Approach, Market Approach, and Asset Approach are applied depending on asset type and business condition.

4. How does valuation impact lenders in IBC?

Accurate valuation reports increase recovery rates, provide confidence to lenders, and attract better bids during insolvency resolution.