Valuation Under IBC In 2025 – Process, Compliance & Expert Insights

Government Approved Valuers in Delhi | Dr. S. N. Bansal – 35+ Years of Valuation Experience
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Why Valuation Under IBC Matters in 2025
In today’s financial landscape, where corporate debt and distress scenarios are increasingly complex, valuation under the Insolvency and Bankruptcy Code (IBC) has become more than just a technical task—it’s a strategic imperative. Accurate valuation plays a central role in identifying viable recovery options for creditors, shaping resolution plans, and ensuring fair treatment for all stakeholders involved in insolvency proceedings.

As of 2025, the IBBI (Insolvency and Bankruptcy Board of India) has tightened the regulatory grip around valuation compliance, raising the bar for professionalism and objectivity. For companies facing insolvency, as well as resolution professionals and investor groups, understanding the nuances of IBC valuation is crucial. It’s no longer just about numbers—it’s about trust, transparency, and timely resolution.

Understanding Valuation in the Context of IBC
Under IBC, valuation refers to the process of determining the fair and liquidation values of an insolvent company’s assets. These two benchmarks form the backbone of the entire resolution process. Fair value refers to the price an asset would fetch in a regular, transparent market transaction between informed buyers and sellers. Liquidation value, on the other hand, is the expected amount that could be recovered if the asset had to be sold under distress or during the company’s closure.

To maintain impartiality and prevent bias, two independent IBBI-registered valuers must be appointed by the resolution professional within a set time frame. Their reports guide decision-making around resolution strategies, bidding processes, recovery assessments, and liquidation pathways.

Legal Framework and Compliance Under IBC
The legal foundation of valuation under IBC comes from the Insolvency and Bankruptcy Code, 2016, and the subsequent valuation standards and guidelines issued by the IBBI. These require that two registered valuers be appointed during the Corporate Insolvency Resolution Process (CIRP) to independently calculate both fair value and liquidation value. The resolution professional overseeing the CIRP must ensure that these valuers are selected within seven days of their appointment and that their assessments are free of conflict of interest.

Valuers must meet strict qualifications, maintain complete independence, and ensure full compliance with IBBI's reporting and valuation protocols. Their valuations are central to evaluating competing resolution plans, establishing the extent of creditor recovery, and guiding decisions in court or before the Committee of Creditors.

How the Valuation Process Works in Practice
The IBC valuation process follows a standardized and methodical path. First, all assets are classified into categories such as land, buildings, machinery, financial instruments, and intangible items like intellectual property or goodwill. This classification helps determine the best approach for valuation. Following this, valuers conduct a detailed on-site inspection and begin collecting key data—ranging from ownership records to financial statements, maintenance logs, and inventory reports. This step ensures that all relevant information is captured accurately and that there are no material omissions.

After this groundwork, the appropriate valuation methods are applied. Valuers might choose the market approach, cost approach, or income approach—depending on the nature of the asset, the availability of reliable data, and the condition of the company. Once the calculations are complete, both fair and liquidation values are prepared, documented, and submitted to the resolution professional as part of the compliance documentation.

Valuation Methods Commonly Used Under IBC
Among the three major approaches used in IBC valuations, the market approach involves determining the value of an asset based on recent sales or transaction data for similar assets in open markets. This method is best suited for real estate, listed securities, or widely traded machinery.

The cost approach evaluates an asset by calculating what it would cost to replace or reproduce it today, adjusted for depreciation and obsolescence. This method is typically used for unique machinery, infrastructure, or specialized plant assets.

The income approach focuses on estimating the present value of future income that the asset is expected to generate. This is ideal for operating businesses, brands, or investments that yield cash flows. Depending on the complexity of the company’s assets, a combination of methods is often used to ensure the valuation is balanced and justifiable under IBC.

Common Valuation Challenges in Insolvency Cases
Valuation under IBC isn’t always straightforward. One of the most common issues is inconsistent or incomplete documentation. Many businesses facing insolvency struggle with outdated asset registers, missing invoices, or poor inventory records. This can significantly delay or distort the valuation process. Another challenge is lack of cooperation from the existing management of the company. Sometimes, due to fear or lack of understanding, company officials may resist site visits or withhold information, making it difficult for valuers to perform a thorough job.

Subjectivity in forecasting also presents a challenge, especially when using the income approach. If projected cash flows or discount rates are not based on reliable assumptions, the valuation can lose credibility and become subject to disputes. These hurdles highlight the importance of engaging experienced valuation professionals who understand how to navigate the complexities of distressed asset evaluation while ensuring compliance.

Selecting the Right Valuation Partner for IBC Assignments
Choosing the right valuation partner can dramatically influence the outcome of an insolvency case. The ideal valuation firm should be registered with the IBBI for all three asset classes—land and building, plant and machinery, and financial securities. Beyond registration, what matters most is deep industry knowledge, a consistent track record of handling CIRP and liquidation matters, and a solid grasp of IBBI’s procedural requirements.

It’s also beneficial to work with a valuation partner that has nationwide reach. Since assets may be spread across multiple locations, on-site assessments need to be coordinated efficiently. A robust internal documentation process, a strong team of sector-specific experts, and the ability to handle complex scenarios such as mergers, litigations, or regulatory reviews are also must-haves.

Government Approved Valuers – Your Trusted IBC Partner
Government Approved Valuers, led by Dr. S. N. Bansal, has been at the forefront of valuation services in India for over 35 years. As a registered valuer entity with IBBI, the firm brings credibility, speed, and regulatory alignment to every engagement. It has been part of major insolvency assignments such as IL&FS, Reliance Communications, and Suzlon Energy.

The firm offers full-spectrum services covering plant and machinery, land and building, financial assets, and complex business valuation. With operations in Delhi, Mumbai, Gurugram, Ahmedabad, and other key metros, Government Approved Valuers ensures quick response times and thorough on-site execution. Their deep sector expertise in infrastructure, telecom, manufacturing, and pharmaceuticals allows them to deliver valuations that hold up in both boardrooms and courtrooms.

Real-World Case Examples That Highlight the Importance of Accurate Valuation
In the landmark insolvency case of IL&FS Group, involving over 85 companies and massive inter-company debt, precise and timely valuation reports were key to identifying viable business units and restructuring them separately from non-performing ones. This allowed creditors to recover significant portions of their dues while avoiding a total collapse.

In another high-stakes scenario involving Reliance Communications, the valuation covered telecom infrastructure, land assets, and subsidiaries across India. Accurate assessment enabled better bidding from resolution applicants and gave financial institutions a clearer roadmap for recovery, ultimately resulting in improved trust in the CIRP process.

Why You Shouldn’t Take Valuation Lightly Under IBC
Valuation is not just about meeting a regulatory requirement—it’s about setting the foundation for a just, timely, and successful resolution. From helping creditors assess realistic recoveries to assisting investors in making informed bids, valuation influences every critical decision during insolvency proceedings.

With so much at stake, working with an experienced, IBBI-compliant valuation firm can make all the difference. Government Approved Valuers offers unmatched expertise, national coverage, and a commitment to integrity that ensures every IBC assignment is completed with precision and professionalism.

If you’re involved in a CIRP or liquidation case—or simply want to ensure you’re making informed financial decisions—connect with Dr. S. N. Bansal and the team at Government Approved Valuers today.

Frequently Asked Questions (FAQs) About Valuation Under IBC

1. How is valuation carried out under IBC in India?
Valuation under IBC is conducted by two independent, IBBI-registered valuers appointed by the Resolution Professional. They assess the company’s assets using approved methods like the market, cost, or income approach to determine both fair value and liquidation value.

2. What’s the difference between fair value and liquidation value?
Fair value is the expected sale price in a normal, voluntary transaction between market participants. Liquidation value is what the asset would likely sell for in a distressed scenario, such as during business closure.

3. Is it mandatory to conduct valuation in every IBC case?
Yes, IBBI regulations require that valuation be done in every Corporate Insolvency Resolution Process to ensure transparency and assist stakeholders in decision-making.

4. Who qualifies as a registered valuer under IBC?
A registered valuer must be certified by IBBI and belong to a recognized professional organization. They must also specialize in one or more asset classes: land and building, plant and machinery, or securities and financial assets.

5. Why is accurate valuation crucial during insolvency?
Accurate valuation ensures fair stakeholder treatment, helps avoid legal disputes, supports better resolution outcomes, and ensures adherence to regulatory expectations under the IBC framework.