Valuation Under IBC (2025): How Assets Are Priced During Insolvency in India

When a business slips into financial distress, emotions, opinions and past performance stop being reliable guides. Under India’s Insolvency and Bankruptcy Code (IBC), numbers take over—and those numbers start with valuation under IBC.

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In every Corporate Insolvency Resolution Process (CIRP), lenders, investors, resolution professionals (RPs) and potential buyers all look to one document: the valuation report. It answers three critical questions:

• What are the company’s assets really worth today?
• What could creditors recover in a realistic sale or resolution?
• Is it better to revive the company or liquidate it?

To bring objectivity to these decisions, the IBC requires valuation to be carried out only by an IBBI–registered valuer under IBC. Firms like RNC Valuecon LLP, acting as Registered Valuers, are appointed by the RP to determine both fair value (a normal-market price) and liquidation value (distress-sale price). These two numbers become the reference point for:

• evaluating resolution plans and bids
  
• negotiating haircuts and recoveries for banks and financial institutions
  
• deciding whether a going-concern sale, asset sale or liquidation is in the creditors’ best interest
  

Inaccurate or incomplete valuation can derail the entire IBC valuation process—either by scaring off serious bidders or by exposing the process to objections and litigation later. Accurate, well-documented valuation, on the other hand, builds trust among stakeholders and speeds up closure.

In the sections that follow, we’ll break down how valuation under IBC works in practice: the legal framework, key concepts like fair value and liquidation value, the step-by-step valuation process, and how to appoint a valuer under IBC who can handle complex, multi-asset cases.

Understanding the Purpose of Valuation Under IBC

When a company enters the Corporate Insolvency Resolution Process (CIRP), its financial statements no longer reflect true market conditions. Assets may have depreciated, machinery may be idle and real estate values may have shifted. The IBC therefore mandates valuation to establish a realistic picture of what creditors can recover and what buyers should offer.

Valuation serves three core purposes:

1. Fair assessment of assets – To derive the fair value that reflects normal market conditions.
   
2. Recovery benchmarking – To determine the liquidation value, which acts as a floor for bidding and recovery expectations.
   
3. Decision support for the Committee of Creditors (CoC) – To help them choose between revival plans or liquidation based on realistic data.
   

The IBC ecosystem has matured significantly since its launch in 2016. With hundreds of CIRP cases handled annually, valuation accuracy is now under regulatory microscope. Recent IBBI amendments (2024–25) require registered valuers to disclose their methodologies to the CoC and maintain detailed working papers for audit purposes. This shift moves valuation from a routine formality to a governance-critical function.

Even small valuation errors can change the entire outcome of a resolution plan. impacting bid ranges, haircuts, and even final approvals from the National Company Law Tribunal (NCLT). By appointing experienced firms like RNC Valuecon LLP, a Registered Valuer under IBC, creditors and RPs gain confidence that the valuation is independent, defensible and aligned with IBBI standards.

How Valuation Drives IBC Decisions

• Resolution vs Liquidation: The fair and liquidation values determine whether revival is feasible or liquidation is inevitable.
  
• Haircut Negotiations: Lenders use valuation data to justify the extent of loan write-offs.
  
• Investor Interest: Reliable valuations attract serious bidders and reduce disputes over price assumptions.
  

Transparency & Trust: Independent valuation fosters stakeholder confidence in the CIRP process.

Every valuation under IBC must comply with statutory rules issued by the Insolvency and Bankruptcy Board of India (IBBI).

Compliance ensures transparency, consistency, and fairness in how a company’s assets are priced during insolvency.

Ignoring these norms can delay the Corporate Insolvency Resolution Process (CIRP) or attract regulatory scrutiny.

Core Regulations That Govern Valuation

1. The Insolvency and Bankruptcy Code, 2016 – establishes the requirement for fair value and liquidation value in every CIRP.
2. IBBI (CIRP) Regulations, 2016 – Regulation 27 & 35 – define how valuers are appointed, timelines, and when re-valuations are allowed.
3. Companies (Registered Valuers and Valuation) Rules, 2017 – specify eligibility, qualifications, and independence criteria for valuers.
4. IBBI Circulars & Amendments (2024-25) – add new obligations such as methodology disclosure to the Committee of Creditors (CoC) and record-keeping of assumptions.

Appointment Rules & Timelines

• The Resolution Professional (RP) must appoint two independent IBBI-registered valuers within seven days of their own appointment.
• Each valuer must physically verify assets and submit reports within 40–50 days.
• If both reports differ by 25 % or more, a third valuer may be engaged; the final value is averaged between the two closest estimates.
• For small or micro companies, a 2024 amendment now allows only one valuer, reducing costs and duplication.

Who Can Be a Registered Valuer Under IBC?

Only professionals certified and registered with the IBBI under the 2017 Rules can act as valuers.
They must specialise in one of three asset classes:

• Land & Building
  
• Plant & Machinery
  
• Securities or Financial Assets

Each valuer must demonstrate domain experience, complete mandatory training, and maintain independence—no conflict of interest with the corporate debtor or RP.

Example: RNC Valuecon LLP, a Registered Valuer under IBC, holds multi-class registration and provides nationwide coverage across industrial, real-estate and business valuations.

Disclosure & Reporting Standards (2024-25 Update)

Recent CIRP amendments (Feb 2024) require:

• Valuers to explain methodologies and assumptions to the CoC.
  
• Fair value to be included in the Information Memorandum unless CoC decides otherwise.
  
• Maintenance of detailed working papers and market comparables for audit readiness.
  
• Full transparency about data sources, depreciation rates and discount factors used.

These norms ensure that every number in the valuation report can be justified before lenders and regulators.

Related Provisions Beyond CIRP

Valuation is also required under other IBC contexts:

• Section 59(3)(b)(ii) – Voluntary Liquidation
  
• Section 46(2) – Avoidance of Undervalued Transactions
  
• Liquidation Regulations & Fast-Track Insolvency Rules
  

Thus, valuation remains a recurring compliance obligation—not a one-time CIRP formality.

Every insolvency case under IBC hinges on two numbers — Fair Value and Liquidation Value.
They are not just accounting estimates; they form the decision baseline for creditors and investors.

Definitions at a Glance

Key Differences Between Fair & Liquidation Value

• Market Assumption: Fair Value assumes normal market conditions; Liquidation Value assumes urgent sale.
• Time Horizon: Fair Value = longer exposure / strategic sale; Liquidation Value = short time window.
• Discounting: Liquidation Value applies additional depreciation and distress discounts.
• Use in CIRP: CoC compares both to judge revival feasibility and expected recovery.
• Regulation Reference: Defined under Regulation 35 of the IBBI (CIRP) Regulations 2016.

How These Values Influence Resolution Plans

• Bid Evaluation: Resolution Applicants must offer more than Liquidation Value for their plans to be considered.
• Haircut Assessment: Banks benchmark offers against Fair and Liquidation Values to justify loan write-offs.
• Investor Confidence: Accurate valuation reduces bid revisions and disputes in CoC meetings.
• NCLT Approvals: Courts often review the valuation methodology if any party challenges a resolution plan.

 Need credible valuation for CIRP or liquidation?

Engage RNC Valuecon LLP — Registered Valuer under IBC for independent Fair and Liquidation Value reports that stand up to CoC and NCLT review.

Book Appointment of Valuer under IBC  

When a company enters CIRP, valuation doesn’t happen randomly—it follows a structured, time-bound process defined by IBBI. The Resolution Professional (RP) drives the process, but only an IBBI-registered valuer under IBC can actually determine the fair value and liquidation value. Getting these steps right ensures smoother CoC discussions, fewer objections, and faster NCLT approvals.

Below is a simplified, practical view of how valuation usually unfolds in real assignments handled by firms like RNC Valuecon LLP.

Step-by-Step Flow of Valuation Under IBC

1. Insolvency Commencement & Appointment of RP
   • CIRP begins; Interim Resolution Professional (IRP) / RP is appointed by NCLT.
     
   • RP takes control of records, assets and management to stabilise the situation.
2. Appointment of Valuer Under IBC
   • Within 7 days of appointment, the RP appoints two independent IBBI-registered valuers (for relevant asset classes).
     
   • Conflict of interest is checked; engagement letters clearly define scope, timelines and deliverables.
3. Information & Document Collection
   • RP shares:
     • Fixed asset register
       
     • Inventory records
       
     • Title documents, invoices, loan statements
       
     • Latest financials & management inputs
   • Valuers review the data, raise queries and plan site visits.
4. Physical Verification & Site Inspection
   • On-ground verification of land, buildings, plant & machinery, inventory and other key assets.
     
   • Note asset condition, utilisation, obsolescence, encumbrances, legal issues, utilities, location advantages etc.
     
   • Photographic evidence and geo-tagging often used to support the report.
5. Selection of Valuation Methods
   • Based on asset type and situation, valuers choose appropriate methods:
     • Market Approach – comparable sale / transaction multiples
       
     • Cost / Replacement Approach – replacement cost minus depreciation
       
     • Income (DCF) Approach – future cash flows discounted to present value (for business / brand / IP)
       
   • In practice, more than one method may be applied to cross-check reasonableness.
6. Computation of Fair Value & Liquidation Value
   • Valuers compute Fair Value (normal market scenario) and Liquidation Value (distress sale assumption) anchored to the Insolvency Commencement Date.
     
   • Adjust for factors like forced-sale discounts, realisation period, sector risk and asset-specific issues.
7. Draft Report, Assumptions & Working Papers
   • Detailed valuation report prepared with:
     • Asset-wise values
       
     • Methods and assumptions
       
     • Market data / comparables
       
     • Limitations and disclaimers
       
   • Working papers are maintained in line with IBBI expectations for future review.
8. Submission to RP & CoC Discussion
   • Reports are submitted to the RP, who shares the values with the Committee of Creditors (usually in summary form).
     
   • CoC may seek clarifications on methodology, discounts, or sector benchmarks; valuers respond and explain.
9. Handling Differences Between Valuers
   • If the two valuers’ Liquidation Values differ by ≥ 25 %, a third valuer may be appointed.
     
   • Final value is taken as the average of the two closest estimates, to reduce subjectivity.
10. Use of Valuation in Resolution Plan Evaluation
    • Fair and Liquidation Values are used to:
      • Evaluate resolution plans
        
      • Decide acceptable haircuts
        
      • Compare revival vs liquidation scenarios
        
    • NCLT may review valuation logic if a plan is challenged.

When a Valuer Is Appointed

Once the Resolution Professional (RP) takes charge of a company under CIRP, one of their first tasks is to appoint registered valuers.
According to Regulation 27 of the IBBI (CIRP) Regulations 2016, this must happen within seven days of the RP’s appointment.
The valuer then becomes responsible for calculating the company’s fair and liquidation values, which set the financial baseline for resolution plans.

Eligibility – Who Can Be a Registered Valuer Under IBC

Only individuals or firms registered with the Insolvency and Bankruptcy Board of India (IBBI) under the Companies (Registered Valuers and Valuation) Rules 2017 can act as valuers.

Each valuer must qualify in at least one of the three asset classes:

• Land & Building
  
• Plant & Machinery
  
• Securities or Financial Assets
  

Additional criteria include:

• Professional degree and minimum five years of experience in relevant asset class.
  
• Completion of IBBI-approved training and membership with a Registered Valuers Organisation (RVO).
  
• No conflict of interest with the corporate debtor or RP.
  
• Strict adherence to the IBBI Code of Conduct.
  

Why Choosing the Right Valuer Matters

• Accuracy drives trust. An experienced valuer brings market intelligence that helps CoC decide objectively.
  
• Compliance reduces risk. Non-IBBI valuations are invalid in CIRP and can lead to regulatory action.
  
• Efficiency saves time. Qualified firms use standardized templates and valuation software for faster turnarounds.
  
• Defensibility. A well-documented valuation report withstands NCLT or audit reviews.

Steps in Appointing a Valuer Under IBC

1. RP invites quotes from IBBI-registered valuers for the required asset classes.
   
2. Verifies credentials and past IBC assignments.
   
3. Signs an engagement letter defining scope, timelines and confidentiality.
   
4. Shares asset details and documents for verification.
   
5. Coordinates periodic updates with CoC on progress and issues.
   

Why Appoint RNC Valuecon LLP as Your Registered Valuer Under IBC

• IBBI-Registered Firm covering Land & Building, Plant & Machinery and Business Valuation.
  
• Pan-India Presence for quick site inspections and asset verification.
  
• Proven Track Record with leading banks, ARCs and insolvency professionals.
  
• Transparent Methodology aligned with IBBI guidelines and IVS standards.
  
• Technology-enabled Reporting for speed and accuracy.
  

Need a credible, compliant valuation for CIRP or liquidation?

RNC Valuecon LLP is a trusted Registered Valuer under IBC with multi-sector expertise and national reach.

Book Appointment of Valuer under IBC

Why Asset-Class-Specific Valuation Matters

Under IBC, not all assets are created equal.

A factory, a patent, and a parcel of land each demand different valuation methods, data sources and risk adjustments.

IBBI guidelines therefore require valuers to be certified in specific asset classes, ensuring precision and comparability.

Firms like RNC Valuecon LLP—a multi-class Registered Valuer under IBC—deploy specialist teams for each category to maintain accuracy and compliance.

1. Land & Building Valuation

Purpose: Determine the current market worth of land parcels, industrial plots, and built-up areas.

Typical Methods:

• Market Approach: Comparable sales analysis using recent transactions, circle rates and guideline values.
  
• Income Approach: Capitalization of rental income (for leased properties).
  
• Cost Approach: Reproduction or replacement cost minus depreciation for specialized facilities.
  

Key Considerations:

• Title and encumbrance checks.
  
• Location and zoning impact.
  
• Building condition and remaining life.

2. Plant & Machinery Valuation

Purpose: Assess resale or replacement value of industrial equipment, production lines and utilities.

Methods:

• Cost Approach: Replacement cost minus physical and functional depreciation.
• Market Approach: Comparable used-asset sales and auction benchmarks.
• Income Approach: Cash-flow method for profit-generating machinery.

Challenges & Checks:

• Idle capacity and obsolescence.
  
• Maintenance records and remaining life.
  
• Verification of serial numbers and ownership proof.
  

3. Business or Enterprise Valuation

Purpose: Estimate overall enterprise value when the business is a going concern.

Methods:

• Discounted Cash Flow (DCF) – projects future cash flows and discounts them to present value.
  
• Earnings Multiple Method – applies industry EBITDA multiples.
  
• Asset-Based Approach – reconciles individual asset and liability values.

Used For:

• Evaluating resolution plans and strategic sales.
  
• Determining equity stake for new investors.
  

4. Intangible Assets (Brands, IP & Goodwill)

Purpose: Identify and monetize non-physical assets often ignored in distress valuations.

Common Methods:

• Relief-from-Royalty Method – present value of royalties saved by owning the IP.
  
• Excess Earnings Method – portion of profits attributable to intangibles.
  
• Replacement Cost – cost to recreate the brand or software.
  

5. Financial & Investment Assets

Scope: Shares, mutual funds, bonds, receivables and inter-corporate deposits.
Approach: Mark-to-market valuation or DCF based on expected recoveries.
Valuers ensure compliance with SEBI and RBI norms when financial assets are involved.

Valuation reports form the foundation of every resolution plan.
If the data becomes outdated, recovery expectations, bids, and haircuts can all be distorted.
Hence, knowing how long a valuation remains valid is crucial for RPs, CoCs and potential investors.

The “90-Day Rule” Explained

Many professionals believe valuations are automatically valid for 90 days—a misconception that comes from FEMA and Companies Act norms, not IBC itself.

Under the IBC framework, there is no fixed universal validity period.
Instead:

• The valuation is anchored to the Insolvency Commencement Date (ICD).
• It remains valid until a material change occurs in market conditions, asset status, or process timeline.

If CIRP extends far beyond 180 days, the Committee of Creditors (CoC) may direct a re-valuation to ensure fairness.

Tip: Treat the 90-day window as a practical guideline, not a legal rule.

When Re-Valuation May Be Required

• Significant change in market prices of key assets (e.g., real estate, commodities).
• Damage, sale, or transfer of any major asset during CIRP.
• Major delays or extension of CIRP beyond 270 days.
• Regulatory or judicial intervention requiring updated reports.

In such cases, the RP can request fresh valuation from the same or new IBBI-registered valuers.

Best Practices to Maintain Valuation Relevance

• Timestamp clearly: State valuation date and reference period on every report.
• Track market movements: Periodically update comparables or indices.
• Maintain documentation: Keep backup of assumptions, rates, and asset conditions.
• Engage experienced valuers who can quickly refresh data when required.

Valuation Methods & Tools Used by Registered Valuers

Registered valuers under IBC rely on globally accepted frameworks adapted to Indian regulations.
Each method serves a different asset type and market scenario:

• Market Approach – compares assets with recent sales or auctions of similar items.
   Read more: Relation of Liquidation & Market Value
• Cost (Replacement) Approach – estimates what it would cost to reproduce or replace an asset minus depreciation.
   Read more: Plant & Machinery Valuation Insights
• Income Approach / DCF Method – values a business or brand based on future cash-flow projections discounted to present value.
   Further reading: Understanding Valuation Under IBC
• Asset / Net Value Approach – adds up adjusted values of assets minus liabilities; useful when liquidation is likely.

How Valuation Affects Resolution Plans & Creditor Recovery

Why Valuation Shapes Every Resolution Decision

Under IBC, valuation is not a formality — it decides the direction and outcome of the entire insolvency process.
The fair and liquidation values determined by registered valuers become the financial compass guiding the Committee of Creditors (CoC).

1. Resolution Plan Evaluation

• Bidders must offer more than the liquidation value to stay eligible.
• CoC uses the fair value to assess how close each bid is to market reality.
• Reliable valuation avoids underbidding and accelerates plan approvals.
  Learn : Valuation Under IBC: Process & Best Practices

 2. Haircut & Recovery Assessment

• Banks benchmark expected recovery percentages against liquidation value.
• Accurate valuation data justifies the haircut proposed in a resolution plan.
• Transparent reporting helps lenders explain recoveries to regulators and auditors.
   Learn more: Valuation Under IBC 2025 – Certified IBBI Valuers

3. Investor Confidence & Bidding Interest

• Independent, defensible valuation attracts serious bidders and discourages speculative offers.
• Investors gain confidence when valuation is prepared by IBBI-registered valuers following consistent methodology.

4. Litigation & NCLT Scrutiny

If valuation is challenged, NCLT examines the valuer’s credentials, methods, and assumptions.
Reports by certified valuers like RNC Valuecon LLP — Registered Valuer under IBC carry higher credibility, reducing objections.

Valuation under IBC is the backbone of India’s insolvency ecosystem.

It transforms distressed assets into quantifiable value — guiding lenders, investors, and courts toward fair, transparent outcomes.

As insolvency cases grow more complex in 2025 and beyond, the need for accurate, compliant, and technology-enabled valuation becomes non-negotiable.

A credible valuation doesn’t just determine what assets are worth — it determines whether a business gets a second chance or meets its end.

Partnering with a certified firm like RNC Valuecon LLP — Registered Valuer under IBC ensures your valuation stands up to every audit, challenge, and regulatory review.
Because in insolvency, precision is recovery.

 Appoint a Registered Valuer Under IBC

Ready for Accurate & Compliant Valuation?

When every crore counts, precision and compliance matter most.
RNC Valuecon LLP, a Talk to our Export
, provides end-to-end valuation support across Land & Building, Plant & Machinery, and Business Assets for CIRP and liquidation.

Why Clients Choose RNC Valuecon LLP:

IBBI-Registered multi-asset valuer firm
Nationwide presence for on-site verification
Proven IBC valuation track record with top banks & RPs
Transparent methodology & defensible reports
Rapid turnaround and digital documentation

1. What is valuation under IBC?

Valuation under IBC is the process of determining a company’s fair value and liquidation value once it enters insolvency. Conducted by IBBI-registered valuers, it helps creditors assess recoverable amounts and guides the Committee of Creditors (CoC) in evaluating resolution or liquidation options.

2. Who can perform valuation under the Insolvency and Bankruptcy Code (IBC)?

Only IBBI-registered valuers authorized under the Companies (Registered Valuers and Valuation) Rules, 2017 can conduct valuations under IBC. They must specialize in at least one asset class — Land & Building, Plant & Machinery, or Securities/Financial Assets — and remain independent from the corporate debtor or RP.

3. What is the difference between fair value and liquidation value under IBC?

Fair value is the price an asset could fetch in a normal market transaction, while liquidation value reflects what it would realize in a distress sale. Both are mandatory under IBC, helping the CoC determine viable resolution plans and realistic recovery expectations.

4. How long is a valuation report valid under IBC?

IBC does not fix a specific validity period like 90 days. A valuation remains valid until significant changes occur in market conditions, asset status, or CIRP timelines. The CoC may order re-valuation if the process extends or assets materially change in value.