Fair Value 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.
Under the February 2026 IBBI reforms, the Resolution Professional appoints two sets of registered valuers, each covering the three asset classes, with one valuer in each set designated Coordinator Valuer to consolidate the set into a single enterprise-level fair value capturing intangible synergies. The RP averages the two aggregated values and places one number before the CoC.
What changed, and why
The centrepiece of the reform is an explanation inserted into the definition of fair value under the CIRP Regulations, requiring the estimated realisable value of the corporate debtor to be computed after taking into account the total estimated realisable value of all of its assets — explicitly including, but not limited to, tangible and intangible assets, together with their underlying synergies.
This shifts the exercise from a sum-of-the-parts, asset-class-wise computation to a single, enterprise-level fair value for the corporate debtor as a whole.
The problem it addresses is concrete. In the Videocon group insolvency — the first major group insolvency in India — each constituent company was valued on a standalone, sum-of-the-parts basis, and valuers took the view that, absent judicial precedent at the time, no synergy value could safely be assumed. The regulatory view was that the synergy inherent in a consolidated group should have been factored in.
The structure
| Element | Position |
|---|---|
| Sets appointed | Two, appointed by the Resolution Professional |
| Composition of each set | One valuer for each of the three recognised asset classes — land and building (L&B), plant and machinery (P&M), and securities or financial assets (SFA) |
| Coordinator Valuer | One valuer within each set, responsible for consolidating the reports of the other two into a single comprehensive enterprise value |
| What the RP places before the CoC | The average of the two aggregated fair values — one number, not three asset-class figures |
What the Coordinator Valuer adds
The consolidation is not arithmetic. The Coordinator Valuer's enterprise value must capture intangible synergies and going-concern assumptions — the material specifically names:
- the value of carry-forward losses;
- customer relationships; and
- similar items that would otherwise fall outside any individual asset class.
That last phrase is the point of the role. A land valuer values land; a plant valuer values plant; neither has a mandate to value what the business is worth as a working whole. The Coordinator Valuer's function is to value what falls between the three mandates.
Two reliefs and one trigger
- Smaller corporate debtors. To manage the cost and time implications of the dual-valuer structure, the CoC may, at its discretion, engage a single registered valuer instead of two where the corporate debtor is an MSME or has a turnover of up to Rs 500 crore.
- Third valuer threshold clarified. A third valuer is appointed only where the variance between the fair value and liquidation value estimates of the two sets exceeds 25%. Within that threshold, the average of the two aggregated estimates is taken and reported to the CoC.
The 25% figure is now a clarified statutory threshold rather than a practice convention — a distinction that matters when explaining to a CoC why a third valuer is or is not being appointed.
Why the reform was needed — the divergence evidence
The case for change rested on measured divergence between independent valuers working from the same facts:
- In one matter involving a sugar company in Jaipur, three registered valuers valued the same parcel of land at Rs 1,000 crore, nil, and Rs 52 crore respectively.
- An IBBI review of fifteen matters in which a third valuer had to be appointed on account of significant variance found that in thirteen of the fifteen cases the gap between the highest and lowest fair value estimates exceeded 100%.
IBBI attributed this largely to the absence of a uniform approach and well-defined standards among valuers, rather than to any inherent unreliability of the valuation exercise itself — which is why the reform package also mandated IVS and a standardised reporting format.
The zero-versus-zero problem
One case illustrates why the framework matters. In ICICI Bank v. Unimark Remedies — a pharmaceutical company that was one of only six manufacturers worldwide capable of producing a particular class of medicine — both registered valuers ascribed nil value to the company's patents, estimated at about Rs 200 crore, purely on account of a regulatory warning letter.
Because both arrived at the same nil figure, the Resolution Professional initially declined to appoint a third valuer, reasoning that a third valuer is warranted only where two values significantly diverge — and zero versus zero showed no divergence. The NCLT directed that intangible assets cannot be valued on a negative or nil basis without proper justification.
What the Coordinator Valuer needs in place
- A defined consolidation methodology, explained to the CoC at the pre-valuation methodology meeting.
- A basis for synergy value that does not double-count what the asset-class valuers have already captured.
- Treatment of going-concern items — carry-forward losses, customer relationships — with identifiability and control tested where relevant.
- Documentation of the consolidation, since the single number placed before the CoC obscures the components unless the workings are retained.
Compliance checklist
- Appoint two sets covering L&B, P&M and SFA, unless the MSME or Rs 500 crore relief applies.
- Designate a Coordinator Valuer within each set.
- Capture synergies and going-concern items that fall outside the asset classes.
- Avoid double-counting between the asset-class reports and the consolidation.
- Place a single averaged number before the CoC.
- Appoint a third valuer only where variance exceeds 25%.
- Never accept a nil intangible value without justification, even where both sets agree.
Common mistakes
- Treating consolidation as addition of the three asset-class figures.
- Omitting synergy value because no single valuer's mandate covers it.
- Presenting three separate figures to the CoC.
- Declining a third valuer on a zero-versus-zero agreement.
- Applying the single-valuer relief outside the MSME or Rs 500 crore turnover cases.