India’s insolvency regulator proposes unified valuation standard

The Insolvency and Bankruptcy Board of India (IBBI) has unveiled a comprehensive set of proposals aimed at overhauling the valuation process under the Insolvency and Bankruptcy Code (IBC), a move intended to enhance transparency, consistency, and the reliability of asset assessments during corporate resolutions.

In a discussion paper released today, the IBBI identified key challenges in the current system, including inconsistent valuation reports, the use of different standards, and a failure to capture the holistic “going concern” value of a business. To address these, the regulator has put forward five key reform proposals.

Key proposed reforms:

1. Standardised Valuation Reports: The IBBI plans to mandate a uniform format for all valuation reports and supporting documentation. This aims to eliminate the current practice of diverse report formats, which often lack crucial details on methodologies and assumptions, leading to confusion, litigation, and delays.
2. A Single Valuation Standard: A key proposal is to harmonise the valuation standards used across different insolvency stages. Currently, Corporate Insolvency Resolution Processes (CIRP) use “internationally accepted valuation standards,” while liquidation follows the Companies (Registered Valuers and Valuation) Rules, 2017. The IBBI seeks to replace both with a single, unified “valuation standard as specified by the Board.”
3. Holistic ‘Fair Value’ Definition: The IBBI has proposed a crucial revision to the definition of ‘Fair Value.’ The current definition focuses on the realisable value of individual assets. The new definition would explicitly require valuers to consider the corporate debtor as a whole, including intangible assets like brand value, intellectual property, and goodwill, thereby capturing the true synergistic enterprise value.
4. Single Valuer for Smaller Companies: To reduce costs and expedite the process for smaller entities, the IBBI has proposed appointing only one registered valuer for companies with an annual turnover of up to ₹500 crore or those classified as MSMEs. The Committee of Creditors (CoC) can, however, opt for two valuers by recording its reasons.
5. Introduction of a ‘Coordinator Valuer’: For larger companies requiring multiple valuers, the IBBI proposes a new role of a ‘Coordinator Valuer.’ This valuer would be responsible for integrating the separate valuations of assets (like land, machinery, and securities) into a single, comprehensive “aggregate fair value” of the company, ensuring a unified view of the business.

Background and rationale:

The discussion paper stems from concerns that unreliable or non-holistic valuations can lead to poor decision-making by creditors, resulting in the rescue of unviable companies or the closure of viable ones. This not only harms stakeholders but also misallocates resources in the economy. The proposals are designed to bolster the credibility of the valuation exercise, which is fundamental for the CoC to evaluate resolution plans effectively and maximize value for all stakeholders.

Stakeholder consultation:

The IBBI has invited public comments on the discussion paper until December 7, 2025. Stakeholders, including creditors, insolvency professionals, and investors, can submit their feedback through the IBBI website.

These proposed reforms represent one of the most significant interventions in the IBC’s valuation framework in recent years. If implemented, they are expected to standardise practices, reduce litigation, and ultimately lead to more efficient and value-maximizing outcomes in India’s corporate insolvency landscape.

Also See: IBBI proposes mandatory beneficial ownership disclosure for resolution applicants