Insolvency and Bankruptcy Code (IBC) has transformed the way distressed businesses are restructured and resolved in India. A cornerstone of this framework is valuation — a process that ensures transparency, fairness, and accurate assessment of assets during insolvency resolution.
As we move into 2025, understanding how valuation services operate under IBC is crucial for insolvency professionals, lenders, promoters, and resolution applicants. This article explores the updated IBC valuation framework, its importance, valuation methods, and practical considerations including business valuation and valuation for insurance purposes.
What Is Valuation Under IBC?
Valuation under IBC refers to the process of determining the fair value and liquidation value of the assets of a corporate debtor undergoing insolvency proceedings. It enables stakeholders to make informed decisions on resolution plans, asset sales, and restructuring strategies.
As per the IBBI (Insolvency and Bankruptcy Board of India), two registered valuers must be appointed to determine:
Fair Value: The estimated market value of assets if sold under normal conditions
Liquidation Value: The likely recoverable value if assets are sold under distressed/liquidation conditions
Why Valuation Services Are Critical Under IBC
Professional valuation services ensure that:
Creditors receive accurate visibility of asset worth
Resolution applicants can bid confidently
NCLT and RP (Resolution Professionals) maintain legal and financial compliance
Value erosion is minimized during asset monetization
Incorrect or rushed valuation can lead to underbidding, delayed resolution, or challenges in court.
What Does the Valuation Process Involve?
A typical business valuation under IBC includes:
1. Appointment of Registered Valuers
As per Companies (Registered Valuers and Valuation) Rules, only IBBI-registered valuers can perform this task.
2. Asset Review & Data Collection
The valuer gathers details on:
Plant & machinery
Land and buildings
Inventory
Receivables and payables
Intangible assets (e.g. brand value, licenses)
3. Method Selection
Depending on the nature of assets and available data, the valuer may use:
Market Approach: Comparing with similar market assets
Cost Approach: Estimating replacement cost minus depreciation
Income Approach: Discounted Cash Flow (DCF) for ongoing businesses
4. Report Submission
Two independent valuers submit their findings to the RP. In case of a significant difference (>25%), a third valuer may be appointed.
Key Challenges in IBC Valuation
Lack of access to premises or documentation
Damaged or disputed assets
Complex ownership structures
Outdated plant/machinery
Variability in legal interpretations
This is where expert-led valuation services become vital to ensure accuracy, legal compliance, and defensibility in tribunals.
Business Valuation vs. Valuation for Insurance in IBC
While both are asset assessment processes, their purposes differ:
| Valuation Type | Objective |
|---|---|
| Business Valuation | To determine overall enterprise value (for resolution plans, mergers, NCLT sales) |
| Valuation for Insurance | To assess replacement cost and insurable value for protection against asset loss or damage during proceedings |
Integrating both ensures full asset visibility and risk coverage.
Real-World Example
In a recent CIRP case handled by RNC, we performed valuation for a flood-damaged hydro project under IBC. The power plant had incomplete civil works and washed-away equipment, yet through careful asset-based and cost-based methodologies, a fair value was established, enabling a successful resolution bid.
Checklist Before Starting IBC Valuation
✅ Appoint 2 registered valuers (from IBBI list)
✅ Share past 3-year financials, asset lists, and liabilities
✅ Provide site access (if possible)
✅ Share insurance documents and lease contracts
✅ Define any contingent liabilities or ongoing litigations
Final Thoughts
In 2025, valuation under IBC is not just a compliance formality — it’s a strategic tool that drives fair resolution and financial recovery. From lenders to IRPs to bidders, accurate valuation unlocks faster, more effective insolvency outcomes.
Partnering with experienced valuation experts ensures credibility, compliance, and speed in navigating the IBC process.
Need Help with Valuation Under IBC?
At RNC our IBBI-registered valuers provide:
Fair & liquidation value reports
Business valuation services
Asset verification & insurance valuation
Audit-ready, regulator-compliant reports
👉 Book a Valuation Consultation