Valuation Under IBC – Court-Defensible Reports for CIRP & Liquidation

Valuation is mandatory and cannot be waived in CIRP and liquidation proceedings. Under Regulation 27 of the IBBI (CIRP) Regulations 2016, the Resolution Professional must appoint two IBBI-registered valuers within seven days of their appointment — regardless of asset size, sector, or complexity.

The only exception is fast-track CIRP for small corporates (Regulation 26), which permits a single registered valuer, subject to CoC approval. Non-compliance exposes the RP to regulatory action and may render the CIRP process procedurally defective.

Under Regulation 35 of the IBBI CIRP Regulations, if the two valuation estimates for Liquidation Value differ by 25% or more (calculated as (L1-L2)/L1 where L1 is the higher value), the Resolution Professional may appoint a third registered valuer.

If a third valuer is appointed, the final value is the average of the two closest estimates — not all three. The 25% variance threshold also triggers increased CoC scrutiny and can delay the CIRP timeline. RNC’s structured approach to valuation methodology significantly reduces the probability of a material divergence between two independently prepared reports.

Yes. Any stakeholder — creditor, resolution applicant, or corporate debtor — can challenge a valuation report before NCLT. Common grounds for challenge include: methodology errors, failure to conduct physical verification of assets, undisclosed conflicts of interest of the valuer, use of outdated market data, or significant divergence from the second valuer’s report without explanation.

NCLT benches are increasingly scrutinising valuation methodology, especially in high-value cases. RNC’s detailed assumption documentation, sensitivity analysis, and explicit methodology justification are specifically designed to withstand such challenges — and we provide expert witness support in contested hearings.

Fair Value (Regulation 2(hb) CIRP Regulations, as amended 2026) is the estimated realisable value of assets in an arm’s length transaction between a willing buyer and willing seller — after proper marketing and without compulsion. This is the “orderly sale” scenario and is typically the higher of the two values.

Liquidation Value is the estimated proceeds from selling assets in a distressed, time-constrained scenario — as if the corporate debtor were being liquidated on the insolvency commencement date. This is invariably lower than Fair Value and serves as the floor below which no resolution plan can be accepted by the CoC.

The Resolution Professional (RP) is responsible for appointing registered valuers under Regulation 27 of the IBBI CIRP Regulations. The appointment must happen within seven days of the RP’s own appointment. The RP selects from IBBI-registered valuers and should ensure both valuers are independent of each other and of all stakeholders in the CIRP.

In liquidation proceedings, the Liquidator appoints the registered valuers under Regulations 34 and 35 of the IBBI Liquidation Regulations. NCLT does not directly appoint valuers — courts may, however, direct re-valuation or appointment of a specific valuer in contested cases.

For a standard CIRP assignment, RNC’s valuation process — from engagement to report submission — typically takes 40 to 50 days, aligned with IBBI’s prescribed timeline. This includes physical site verification across all asset locations, data room review, modelling, sensitivity analysis, and final report preparation.

Complex assignments — multi-state manufacturing, infrastructure with 50+ locations, or large group companies with intangible assets — may require 60-75 days. For CIRP cases with immediate timeline pressure, we discuss expedited options on a case-by-case basis. Contact us within 24 hours of your RP appointment.

Yes. RNC Valuecon LLP is a Registered Valuer Entity (RVE) under IBBI for all three asset classes: Plant & Machinery, Land & Building, and Securities or Financial Assets. Most CIRP cases involve assets across all three classes — manufacturing companies have all three; real estate developers have primarily Land & Building with some financial assets.

As a single-window firm registered across all classes, RNC eliminates the coordination burden of appointing multiple valuation firms — simplifying the RP’s management of the CIRP process while ensuring consistent methodology and a unified final valuation view.

IBBI’s circular dated April 1, 2026 makes International Valuation Standards (IVS), issued by the IVSC (International Valuation Standards Council), mandatory for all IBC valuations with immediate effect. This replaces the previous dual-standards approach where CIRP used IVS but liquidation followed Companies (Registered Valuers) Rules, 2017.

Under IVS, all valuation reports must include: explicit basis of value, scope of work, methodology justification with documented rationale for approach selection, assumptions and limiting conditions, and supporting evidence. RNC’s reports are fully IVS-compliant from the April 2026 effective date.