Valuation of Intangible Assets 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.
Here is a pattern that repeats in resolution after resolution.
A corporate debtor's balance sheet shows land, plant and receivables. The valuation reports value land, plant and receivables. A plan is approved. The successful applicant then completes a Purchase Price Allocation under Ind AS 103, and recognises intangible assets — brands, customer relationships, technology — at fair values that were never in the CIRP valuation at all.
That gap is not an accounting curiosity. It is value that belonged to the creditors and was not counted when they voted.
Intangibles sit inside the Securities or Financial Assets class. Most of them are not on the balance sheet, so identification comes before valuation. Since February 2026 they are no longer optional: fair value is expressly defined on the total realisable value of all assets, including intangibles and their underlying synergies. Insolvency itself depresses brand perception, and separating that temporary hit from intrinsic value is the core judgment. Where the intangible is independently transferable, it holds value even in liquidation.
Intangibles are now part of the definition
This used to be an argument about good practice. It is now an argument about the text.
The February 2026 amendment added an explanation to the definition of fair value: the value must be computed on the total estimated realisable value of all the assets of the corporate debtor, including tangible and intangible assets together with their underlying synergies. Fair value became an enterprise-level measure, and the Coordinator Valuer in each set is the person who has to consolidate the asset-class reports into it. What changed in February 2026 →
Two consequences for anyone valuing an intangible-heavy debtor:
Leaving intangibles out is no longer a scope choice. A report that values land, plant and receivables and is silent on the brand has not answered the question the Regulation asks.
Nil is a conclusion that has to be reasoned. In ICICI Bank v. Unimark Remedies, both valuers assigned nil value to a patent portfolio said to be worth around ₹200 crore, on the strength of a regulatory warning letter. The RP declined to appoint a third valuer, since two identical zeros showed no divergence. The NCLT held that intangibles cannot be written down to nil or negative without justification — the point being that a valuer who cannot value an intangible must say why, not record a zero and move on.
The case also shows how the divergence mechanism can fail quietly. Two valuers who reach the same wrong answer produce no variance, and nothing in the 25% test catches it. The 25% divergence rule →
What counts as an intangible here
Brands and trademarks. Patents, designs and technology. Customer relationships and contracts. Franchise and licence rights. Distribution networks. Goodwill. An assembled, trained workforce.
They sit within the Securities or Financial Assets asset class — alongside listed equity and trade receivables — which means the valuer registered for that class is the one who has to handle them. The three asset classes →
And most of them are not recognised in the books. A brand built over thirty years of advertising appears on the balance sheet only if it was purchased; one that was built shows nothing. So the first task is not valuation at all — it is identification, and it is done by reading contracts, not ledgers.
The six problems, and what to do about each
1. Nothing to inspect. Physical verification, the backbone of tangible asset valuation, has no analogue here. You cannot walk a brand. Verification becomes documentary and market-based: registrations, licence agreements, royalty receipts, market share data.
2. Insolvency itself damages the asset. The commencement of a CIRP is public, and in India there remains a strong market association between insolvency and brand erosion. Customers, students, franchisees and suppliers react to the announcement.
The valuer's job is to separate the temporary reputational impact of the process from the intrinsic long-term value of the brand. A brand with thirty years of recognition does not become worthless because a petition was admitted — but nor is it worth what it was six months earlier. That judgment has to be stated and reasoned, because it will be the first thing challenged.
3. No data. CRM records missing, no royalty benchmarks, no management forecasts, no comparable licensing transactions. Where management is uncooperative or records have been seized, the position gets worse. Valuers fall back on cost-based or proxy methods — which is defensible, provided the fallback and the reason for it are disclosed.
4. Genuine subjectivity. Two competent valuers can reach materially different conclusions on the same brand from the same facts. That is inherent, not a failing. What is a failing is not documenting the assumptions well enough for the CoC to understand why they differ. When valuations diverge →
5. Uncertain legal status. Whether particular rights are transferable assets at all — spectrum licences, airport slots, franchise rights — has been contested repeatedly. Where transferability is unresolved, the valuation should present the position as a range contingent on the legal outcome, not pick one branch silently.
6. It cannot be done alone. Identifying and substantiating intangibles needs the RP, financial creditors, legal advisors and sector specialists. In an intangible-heavy CIRP the RP's role stops being purely administrative and becomes commercial information-gathering and litigation management.
The methods, and when each fits
| Method | How it works | Fits when |
|---|---|---|
| Relief-from-royalty | Value the royalty the company avoids paying by owning the brand | There are franchise or licence arrangements, or observable royalty benchmarks |
| Capitalised earnings / excess earnings | Isolate the earnings attributable to the intangible and capitalise them | The business is operating and earnings can be attributed |
| Cost approach | What it would cost to recreate the asset | Fallback where no income or market data exists — weakest, and must be labelled as such |
| Market / comparable transactions | Observed sales of comparable intangibles | Rare in India, but strongest evidence where genuinely comparable |
The choice is not cosmetic. A cost-based number for a well-known consumer brand will understate it substantially, and if the report does not explain why cost was used, the CoC has no way to know it is looking at a floor. Relief-from-royalty in detail →
Do intangibles survive liquidation?
The textbook answer is no — intangibles lose their value in liquidation because there is no enterprise to carry them.
The working answer is: it depends entirely on transferability.
Where a brand can be bought and used by an acquirer on its own, without taking the operating business with it, it has liquidation value. Consumer goods, education and retail are where this is seen most, because in each the name carries customer recognition that survives the corporate vehicle.
So the test to apply is not "is this a going concern". It is "can somebody buy this name separately and use it". If the answer is yes and it has been excluded from liquidation value, the floor for operational creditors under Section 30(2)(b) has been understated. Fair value vs liquidation value →
Preserving the asset while you value it
Intangibles are the only asset class that can deteriorate because of the process itself, and the rate of deterioration is partly within the RP's control.
Disruption to operations, a fall in service quality, adverse publicity, franchisees drifting away — each has an immediate effect on the value of what is often the debtor's principal asset. In a brand-led CIRP, keeping the business running credibly is not just operational housekeeping; it is asset preservation.
This creates a real tension with the statutory transparency the process demands. Public announcements are mandatory; publicity damages the asset. There is no clean resolution, but the practical answer is to keep confidential what is permitted to be confidential — and valuation numbers are squarely in that category. Confidentiality of valuation reports →
The Purchase Price Allocation test
If you want to know whether a CIRP valuation captured the intangibles properly, look at what happens afterwards.
The successful resolution applicant has to perform a Purchase Price Allocation under Ind AS 103 on acquiring the corporate debtor, recognising identifiable intangible assets at fair value. Where the PPA surfaces substantial intangibles that the CIRP valuation never mentioned, the process undervalued the estate — and the creditors bore that difference.
Running the question in advance — what would a PPA find here? — is a useful discipline for the valuer and for the RP, well before a plan is approved. PPA after CIRP →
Key takeaways
- Intangibles sit in Securities and Financial Assets, not in their own class.
- Fair value is defined to include them, and their synergies, since February 2026.
- A nil valuation must be justified. Two matching zeros defeat the divergence test.
- Identification precedes valuation — most are not on the balance sheet.
- Separate the process-driven reputational hit from intrinsic value, and reason it explicitly.
- Transferability, not going-concern status, decides whether an intangible has liquidation value.
- Label the cost approach as a fallback whenever it is used.
- Contested transferability belongs in a range, not a silent assumption.
- Ask what a PPA would find. If the answer is "a lot", the valuation is incomplete.
Read next
- Brand and Franchise Valuation in Asset-Light CIRP
- Relief-from-Royalty Method for Brand Valuation
- Fair Value vs Liquidation Value Under IBC
- Securities and Financial Assets Valuation Under IBC
- Purchase Price Allocation After CIRP: Ind AS 103
Disclaimer: Positions stated as on 5 September 2026. The transferability of particular licences and rights continues to be litigated — verify the current position before relying on any characterisation here.