CoC Uses Valuation explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
"Commercial wisdom" is the phrase that ends most arguments in a CIRP. A dissenting creditor objects, a rejected applicant complains, a promoter litigates — and the answer comes back that the decision belonged to the Committee of Creditors and is not open to review.
That is broadly right. But it has a condition attached that gets much less attention, and it is the condition that decides cases.
Commercial wisdom is protected when it is informed. Strip away the valuation foundation and the protection goes with it.
A plan needs 66% of the voting share. Fair value and liquidation value are benchmarks, not floors — a plan may be approved below both. Since February 2026 the CoC sees one averaged fair value, not competing estimates, and meets the valuers at a pre-valuation methodology meeting before the work starts. But operational creditors must get their Section 30(2)(b) liquidation entitlement, and every CoC member must have actually seen the valuation reports, under NDA, before voting. That last point is the RP's obligation and the commonest procedural gap.
What the CoC is actually deciding
The Committee approves a resolution plan by not less than 66% of the voting share of financial creditors. What it is weighing is a commercial question: is this offer better than the alternative?
The alternative is liquidation. So the two numbers exist to make that comparison possible:
- Liquidation value tells the CoC what the downside looks like if no plan is approved.
- Fair value tells it what the business is worth if properly marketed and sold as a functioning enterprise.
Neither number tells the CoC what to do. They frame the decision. The two numbers explained →
One number, arrived at by two routes
What reaches the CoC changed with the February 2026 reforms, and it changes how the meeting runs.
The RP appoints two sets of valuers. Each set has one valuer per asset class and a designated Coordinator Valuer, who consolidates that set's work into a single enterprise-level fair value — including intangibles and the synergies between assets, rather than a sum of parts. The RP then averages the two aggregated figures and places one number before the Committee. Where the two sets diverge by more than 25%, a third valuer is appointed first. The coordinator valuer →
For an MSME, or a debtor with turnover up to ₹500 crore, the CoC may engage a single valuer instead of two sets.
The practical consequence: a CoC no longer sits with two or three competing numbers and picks a view. It gets one figure and a documented process behind it — which makes the questions worth asking questions about method and assumptions, not about which valuer to believe.
And the CoC meets the valuers before the work begins. The RP must convene a pre-valuation methodology meeting at which each valuer explains the approach and key assumptions they propose to adopt. That is the CoC's real opportunity to influence scope — raising an omitted asset class or a doubtful assumption there costs nothing, while raising it after the reports are in costs weeks.
The benchmarks are not floors
This is the most persistent misunderstanding in CoC meetings, and it cuts both ways.
A plan may be approved below the liquidation value. The Supreme Court held in Maharashtra Seamless Ltd v. Padmanabhan Venkatesh that there is no statutory requirement for a resolution plan to match or exceed the liquidation value. Financial creditors are free to take a haircut — that is what a haircut is.
A plan may also come in far above fair value. Fair value is computed on evidence available at the commencement date. Where a sector receives a policy push after that date — a large government capital programme, an import restriction — plans can arrive at multiples of the benchmark, because option value created later was never in the number. When policy shifts beat the benchmark →
So neither figure is a reserve price. They are the reference frame the CoC reasons within.
The one hard constraint
Section 30(2)(b) is where discretion stops.
Operational creditors must receive at least the amount they would have received in a liquidation under the Section 53 waterfall. That entitlement is computed off the liquidation value, and it is not a matter of commercial judgment — a plan that fails it is not compliant, and the RP should not be placing it before the CoC as though it were.
Two things follow that matter in practice:
The liquidation value has to be right, because the operational creditors' floor is derived from it. Understate it — by leaving out a transferable brand, by ignoring a receivable, by failing to net a ring-fenced amount correctly — and you have understated a statutory entitlement. EPF ring-fencing →
Dissenting financial creditors have their own entitlement to be paid in priority, computed by reference to the same value. Getting the number wrong therefore has two separate statutory consequences, not one.
The procedural obligation that gets missed
Before any vote on a plan, every CoC member must have had access to the valuation reports — provided electronically, under the confidentiality undertaking the Code requires.
This is the RP's obligation, and it is the gap most often found when a decision is challenged. A creditor who voted without seeing the numbers did not exercise informed commercial judgment; they exercised uninformed judgment, which attracts none of the protection.
The practical discipline:
- circulate the values before the meeting at which the plan is discussed, not during it;
- obtain and retain the confidentiality undertakings;
- minute that the reports were made available and that members had the opportunity to review them;
- record any member's request for clarification and how it was answered.
That paper trail is what converts "the CoC decided" into a defensible proposition. Confidentiality and NDAs →
And the reports do not go to resolution applicants. A bidder who knows the liquidation value will bid at it, converting the floor into a ceiling and defeating the value-maximisation objective the whole exercise exists to serve.
Where plans actually get unwound
The Adjudicating Authority does not second-guess the commercial merits. The line drawn in Committee of Creditors of Essar Steel v. Satish Kumar Gupta is that the CoC's commercial decision is very largely beyond review.
What is reviewable is whether the decision rested on anything.
Challenges succeed where:
- the methodology is vague or unexplained;
- assumptions are unjustified, or worse, undisclosed;
- a material item was left out of the computation — an encumbrance, a statutory charge, a class of asset;
- the statutory floor for operational creditors was not met;
- CoC members voted without access to the valuation.
On encumbrances specifically, State Tax Officer v. Rainbow Papers Ltd is the reminder that a statutory charge under a State law can create a security interest. A valuation that worked only from the corporate debtor's own disclosure — when the debtor had every incentive not to disclose — is exposed. Judicial scrutiny of valuation reports →
The workable standard: if the valuation cannot be explained to the Tribunal in plain language, with each number traceable to a source, an assumption or a stated professional judgment, it will not carry the decision built on it.
What the CoC can legitimately do with a number it distrusts
Quite a lot, and it is worth knowing before a meeting stalls.
- Raise it at the methodology meeting, which happens before any of the work is done and is the cheapest point to change scope.
- Ask questions of the valuers. Valuers present to the CoC; the CoC can require them to explain methodology and assumptions.
- Ask for sensitivity analysis showing how the value moves as key assumptions move. Assumptions and sensitivity →
- Seek a third valuation — mandatory where the two sets' aggregated figures diverge by more than 25%, but available to the CoC in the exercise of its commercial discretion even below that threshold. The 25% rule →
- Record dissent. A member who disagrees should have that reasoning minuted rather than simply voting against.
What the CoC cannot do is treat an unexplained number as authoritative because it arrived in a report.
Key takeaways
- 66% approves a plan. The valuation frames the decision; it does not make it.
- The CoC now receives one averaged, enterprise-level figure, not competing estimates.
- The methodology meeting is the CoC's cheapest point of influence.
- Neither value is a floor or a ceiling.
- Section 30(2)(b) is the hard constraint — and it is computed off the liquidation value.
- Every CoC member must see the reports before voting. Minute it.
- Reports never go to bidders.
- Commercial wisdom is protected only when informed — that is the condition, not a formality.
- Challenges succeed on foundations, not on merits: vague methodology, hidden assumptions, missing items.
Read next
- Valuation Under IBC: The Complete Guide
- Fair Value vs Liquidation Value Under IBC
- Judicial Scrutiny of Valuation Reports Under IBC
- Resolution Plan: Contents, Approval and Implementation
- Liquidation Process: Waterfall Mechanism Under Section 53
Disclaimer: Positions stated as on 5 September 2026. This is general information on the framework, not advice on any particular plan or vote.