IBBI Proposes Comprehensive Reform of Valuation Framework to Strengthen Transparency and Standardisation under the IBC
- REEDLAW
- 12 minutes ago
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REEDLAW Legal News Network reports: In a significant policy development, the Insolvency and Bankruptcy Board of India released a discussion paper on 14 November 2025 proposing a comprehensive overhaul of the valuation ecosystem under the Insolvency and Bankruptcy Code, 2016. The paper aims to enhance the accuracy, consistency, and credibility of valuations by addressing longstanding issues relating to divergent reports, inconsistent methodologies, under-recognition of intangible assets, and disproportionately high costs for smaller corporate debtors.
The discussion paper underscores the need for structural reforms to ensure uniformity, transparency, and reliability across all insolvency processes, including CIRP, liquidation, PPIRP, fast-track resolution, voluntary liquidation, and individual bankruptcy. By proposing standardised reporting formats, harmonised valuation standards, a revised definition of fair value, and the introduction of coordinator valuers or single valuers for small entities, the IBBI seeks to create a valuation regime aligned with global best practices while reducing disputes and strengthening stakeholder confidence.
The key features of the discussion paper are summarised below:
1. Standardisation of Valuation Reports and Documentation
The IBBI proposes empowering itself to mandate a uniform reporting format and documentation framework for all Registered Valuers (RVs) across CIRP, liquidation, PPIRP, fast-track, voluntary liquidation, and personal guarantor bankruptcy proceedings. A standardised format is expected to reduce inconsistencies, enhance comparability, and minimise litigation arising from incomplete or opaque valuation practices.
2. Harmonised Valuation Standards Across All Processes
The present dual-standards approach—international valuation standards during CIRP and the Companies (Registered Valuers and Valuation) Rules, 2017 during liquidation—is proposed to be replaced with a single harmonised valuation standards framework prescribed by the IBBI. This unified framework aims to ensure methodological consistency throughout all stages of insolvency resolution.
3. Revised Definition of Fair Value to Include Intangible Assets and Synergies
The paper proposes redefining ‘Fair Value’ to encompass both tangible and intangible assets (including brand, IP, goodwill, and customer relationships) and to account for the synergistic value of the corporate debtor as an integrated business. This transition from asset-specific valuation to a holistic enterprise valuation model is expected to enhance accuracy, narrow valuation gaps, and bring Indian practices in alignment with global standards.
4. Single Registered Valuer for Small Corporate Debtors
To reduce CIRP costs for smaller companies, the IBBI proposes allowing the appointment of a single Registered Valuer (per asset class) for corporate debtors falling below a prescribed threshold—either turnover ≤ ₹500 crore or MSME classification. The CoC or liquidator may still appoint two valuers, but only with recorded reasons.
5. Introduction of a Coordinator Valuer for Holistic Enterprise Valuation
The paper recommends the appointment of sets of RVs wherein one valuer is designated as the Coordinator Valuer responsible for consolidating asset-class valuation reports into a single Aggregate Fair Value (AFV). In cases where two valuation sets diverge by 25% or more, a third set may be appointed. This model is intended to ensure holistic enterprise-level valuation, capturing synergies and intangible components comprehensively.
The IBBI’s November 2025 Discussion Paper represents one of the most substantial and forward-looking reform initiatives directed at the valuation framework under the IBC since its inception. By emphasising standardisation, harmonisation, enterprise-level valuation, and cost optimisation, the proposals directly address longstanding inefficiencies identified through practical experience and judicial scrutiny.
If implemented, these reforms are expected to:
Substantially improve valuation quality
Reduce valuation-related disputes and litigation
Enhance stakeholder trust and practical predictability
Strengthen the overall effectiveness of the IBC framework
The proposed measures mark a crucial step toward transforming India’s insolvency ecosystem into a more transparent, consistent, and globally aligned regime.
Download the Discussion Paper for comments and suggestions:
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