IBBI Issues Draft Guidelines to Standardise Valuation Under the Insolvency and Bankruptcy Code, 2016
- REEDLAW
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REEDLAW Legal News Network reports: In a pivotal development aimed at strengthening valuation governance under India’s insolvency regime, the Insolvency and Bankruptcy Board of India on 19 November 2025 released a comprehensive Discussion Paper proposing uniform, standardised guidelines for conducting valuation under the Insolvency and Bankruptcy Code, 2016. The initiative sought to enhance transparency, improve methodological consistency, and ensure credible valuation outcomes that guide critical decision-making by creditors and insolvency professionals across resolution and liquidation processes.
Building upon its earlier paper issued on 17 November 2025, the Board expanded its approach by proposing detailed documentation norms and asset-wise mandatory formats for valuation reports. The draft guidelines were structured in two parts: General Requirements applicable to all valuation assignments, and Asset-Specific Formats covering Land & Building, Plant & Machinery, and other categories. Seeking stakeholder feedback, IBBI emphasised that valuation under the IBC must be supported by verifiable evidence, clearly articulated assumptions, and transparent professional judgment to ensure informed decision-making by the Committee of Creditors.
The Discussion Paper builds upon the earlier paper issued on 17 November 2025, which proposed empowering the Board through regulations to prescribe a uniform valuation report format and establish mandatory documentation standards for Registered Valuers (RVs) undertaking assignments under the IBC. Responding to stakeholder demand and recognising the critical role of valuation in the insolvency ecosystem, the Board has now drafted structured guidelines categorised into General Requirements (Part I) and Asset-Specific Report Formats (Part II).
Purpose and Objective of the Guidelines
Valuation under the IBC determines the Fair Value and Liquidation Value of the corporate debtor’s assets—figures that directly influence decision-making by the Committee of Creditors (CoC), insolvency professionals, and resolution applicants. To ensure these values are credible and defensible, the draft guidelines emphasise:
Consistency in valuation methodology
Comprehensive documentation
Transparency in assumptions, data, and professional judgments
Standardised reporting across all asset classes
IBBI stresses that valuation must be backed by a well-structured process, supported by evidence, and articulated in a manner that enables regulators, creditors, and courts to fully understand the basis of the valuer’s conclusions.
Stakeholder comments have been invited until 10 December 2025.
PART I – GENERAL CONTENT OF THE GUIDELINES
Part I prescribes uniform standards applicable to all valuation assignments conducted under the IBC.
1. Documentation Requirements
Registered Valuers must maintain comprehensive written records capturing the entire valuation process. This includes:
Communications with the client
Working papers
Alternative methods assessed
Additional data considered
Risk identification and mitigation
Exercise of professional judgment
Quality control procedures
Documentation must clearly reflect the scope of work, methodology adopted, and rationale behind the arrived values. The intent is to enable any reviewer to understand how the valuation was executed and why certain approaches were selected.
2. Minimum Mandatory Contents of the Valuation Report
The valuation report must contain at least the following:
Purpose and Scope
Name and Registration Number of the RV/RVE
Details of experts involved, if any
Disclosure of conflicts of interest
Identity of client and intended users
Intended use
Details of assets/liabilities being valued
Background information
Valuation currency and measurement units
Valuation Report Identification Number (VRIN)
Sources of information
Basis and premise of value
Valuation standards followed
Approaches and methods adopted
Discounts and premiums applied
Key assumptions and limiting conditions
Details of inspections or investigations
Sustainability and functional factors
Value conclusion and rationale
Caveats as per IBBI’s 2020 Guidelines
This ensures uniformity across all valuation reports submitted in IBC proceedings.
3. Key Parameters for Valuing Receivables
When valuing receivables, the RV must consider:
Nature of receivable (trade, loans, advances, tax, etc.)
Regulatory framework (Companies Act, RBI norms)
Credit risk profile and related party status
Ageing analysis
Legal enforceability and documentation
Past recovery trends and costs
Macroeconomic and industry factors
This aims to minimise arbitrary or inconsistent valuation of receivables, which often constitute a significant proportion of distressed asset portfolios.
PART II – ASSET-SPECIFIC VALUATION FORMATS
Part II introduces detailed templates for valuation reports across asset classes. These formats are mandatory and aim to ensure uniformity in presentation and content.
The Board has provided full formats for:
1. Land & Building Valuation Format
This includes:
Executive summary
Asset details
Property history and approvals
Measurement units and currency
Basis and premise of value
Approaches considered (Market, Income, Cost)
Discounts and premiums
Sustainability, environmental and regulatory factors
Value determination: Fair Value, Liquidation Value, Book Value
Annexures (maps, photographs, title documents, CoC meeting minutes)
The format requires granular disclosure such as topography, frontage-to-depth ratio, FAR potential, encumbrances, and market comparables.
2. Plant & Machinery Valuation Format
Key components include:
Asset specifications (make, capacity, year of purchase, usage)
Fixed Asset Register
Maintenance history
Purchase documents
Market data
Cost indices
Detailed application of Market, Cost, and Income approaches
RV must also provide evidence of consultations with manufacturers, agents, or market experts.
Stakeholder Participation Mechanism
Comments may be submitted online through a structured process:
Visit www.ibbi.gov.in
Select Public Comments
Open the relevant Discussion Paper
Provide name, email, and stakeholder category
Choose between General Comments or Specific Comments
Submit inputs by 10 December 2025
Stakeholders may comment on inconsistencies, implementation challenges, missing provisions, or specific paragraphs of the guidelines.
Regulatory Significance and Expected Impact
These draft guidelines represent one of the most comprehensive standard-setting initiatives undertaken by IBBI. Their expected outcomes include:
Improved reliability of valuation reports
Greater confidence among creditors and investors
Reduction in disputes arising from inconsistent valuation
Better transparency in CoC decision-making
Strengthening of the entire insolvency resolution framework
Once finalised, these guidelines will significantly enhance the professional standards governing valuation in India’s insolvency regime.
Download the Discussion Paper on Proposed Guidelines:
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