Valuation under the Insolvency and Bankruptcy Code, 2016 (IBC) is a critical step to ensure fairness, transparency, and confidence among stakeholders during insolvency, resolution, or liquidation processes. The Insolvency and Bankruptcy Board of India (IBBI) has laid down a structured framework that mandates valuations be carried out by a Registered Valuer under IBBI.

For CEOs, CFOs, Chartered Accountants, and legal professionals, a clear understanding of the scope, timelines, and provisions relating to IBBI valuation is essential for compliance and strategic decision-making.

1. What is IBBI Valuation?

IBBI valuation is the process of determining the fair value and liquidation value of assets as prescribed under the IBC and related regulations. It ensures informed decision-making by the Committee of Creditors (CoC), insolvency professionals, and adjudicating authorities. Importantly, such valuations can only be conducted by Registered Valuers under IBBI, certified for specific asset classes – land & building, plant & machinery, and securities/financial assets.

2. Scope of Valuation under IBC

Valuation requirements under the IBC primarily cover the following situations:

• Corporate Insolvency Resolution Process (CIRP)
  
  • To determine the fair value and liquidation value of the corporate debtor’s assets.
    
  • To aid the CoC in evaluating resolution plans.
    
• Fast-Track Insolvency Resolution
  
  • Similar valuation requirements as CIRP, but with shorter timelines.
    
• Liquidation Process
  
  • Valuation of assets to assess realizable value for distribution to stakeholders.
    
• Voluntary Liquidation
  

Valuation required before initiating the process, supported by Registered Valuer reports.

3. Key Legal Provisions and Rules

Several sections of the IBC and related IBBI regulations govern valuation:

Provision	Rule/Regulation	Valuation Requirement
CIRP Regulations, 2016	Regulation 27	Appointment of two Registered Valuers within 7 days of commencement for asset valuation.
	Regulation 35	Determination of fair value & liquidation value; appointment of a third valuer if reports vary significantly.
Fast-Track CIRP Regulations	Regulation 26, 34	Appointment of at least one Registered Valuer to assess asset values.
Liquidation Process Regulations, 2016	Regulation 34(2), 35	Liquidator to appoint two Registered Valuers within 7 days to determine realizable value of assets.
IBC – Voluntary Liquidation	Section 59(3)(b)(ii)	Valuation report(s) by Registered Valuer required before initiation of voluntary liquidation.

4. Timelines for Valuation

Time-bound compliance is central to the valuation framework:

• CIRP: Two Registered Valuers to be appointed within 7 days of insolvency com
  mencement (but not later than the 47th day). Reports generally to be submitted within 40–50 days.
  
• Fast-Track CIRP: One Registered Valuer to be appointed immediately after commencement.
  
• Liquidation: Two Registered Valuers to be appointed within 7 days of liquidation commencement.
  
• Voluntary Liquidation: Valuation report(s) required before filing the declaration of solvency.
  

5. Fair Value vs. Liquidation Value

• Fair Value: The estimated realizable value of assets in an arm’s-length transaction, assuming adequate marketing and negotiation.
  
• Liquidation Value: The estimated realizable value if assets were sold on the insolvency commencement date under distressed or time-bound conditions.
  

Both values are crucial—Fair Value aids in assessing resolution plans, while Liquidation Value sets the baseline for recovery in liquidation.

6. Role of Registered Valuers under IBBI

Registered Valuers under IBBI are independent professionals responsible for:

• Ensuring unbiased and transparent asset valuations.
  
• Following prescribed valuation standards and professional ethics.
  
• Supporting Insolvency Professionals, CoC, and NCLT in critical decision-makin

7. Why IBBI Valuation Matters

For business leaders and professionals, IBBI valuation is not just a compliance requirement but also a strategic tool. It ensures:

• Regulatory adherence and reduced litigation risk.
  
• Transparency and fairness in insolvency or liquidation processes.
• Confidence for creditors, investors, and stakeholders.
• Informed financial and legal decision-making.
  

Conclusion

Valuation under IBC is a well-defined process governed by IBBI, ensuring fairness and accuracy in insolvency and liquidation proceedings. Adhering to the rules, timelines, and appointing a Registered Valuer under IBBI is not only mandatory but also integral to protecting stakeholder interests and driving effecti