Valuation Under IBC 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.
At some point in every corporate insolvency, a room full of bankers has to vote on whether to accept a resolution plan or push the company into liquidation.
They are deciding the fate of a business most of them have never run, on information supplied by a professional appointed weeks earlier, under a statutory clock. The only objective anchor they have is two numbers — fair value and liquidation value — produced by registered valuers they met once.
Get those numbers wrong and everything downstream is wrong: the benchmark for the plan, the floor for operational creditors, the case the resolution professional has to defend before the Tribunal.
This is how that machinery actually works.
Since February 2026, the RP appoints two sets of registered valuers — each set with one valuer per asset class and one designated Coordinator Valuer — within seven days of appointment and by the 47th day from insolvency commencement. Each set produces a single enterprise-level fair value; the RP averages the two and gives the CoC one number. Both values are measured as on the insolvency commencement date, and go to the CoC under confidentiality — never to resolution applicants.
Why valuation carries so much weight
The stated object of the Code is the maximisation of the value of assets of the corporate debtor. Value maximisation is not measurable without a measure — so valuation is the instrument the whole statute leans on.
Concretely, four different actors depend on it:
The Committee of Creditors. A resolution plan needs the approval of not less than 66% of the voting share of financial creditors. Fair value and liquidation value are the benchmarks against which the CoC judges whether a plan is worth taking. How CoC commercial wisdom actually works →
The resolution professional. An RP walks into a company they have never seen, often with hostile promoters and incomplete records. The valuation reports are how they learn what the estate contains. The RP's role →
Operational creditors. Section 30(2)(b) requires a plan to pay operational creditors at least the amount they would have received in a liquidation under the Section 53 waterfall. That entitlement is computed off the liquidation value. Understate it and the plan is defective. The waterfall →
The Adjudicating Authority. When a plan is challenged — by a dissenting creditor, a rejected applicant, or the erstwhile promoter — the valuation is what gets attacked. It has to be capable of being explained in plain language, with every number traceable.
The two numbers, precisely
The CIRP Regulations define both, and the wording matters more than practitioners often assume.
Fair value is the estimated realisable value of the assets if they were exchanged on the insolvency commencement date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, where both parties acted knowledgeably, prudently and without compulsion.
Liquidation value is the estimated realisable value of the assets if the corporate debtor were liquidated on the insolvency commencement date.
Three things follow that people get wrong:
Both are fixed to the insolvency commencement date. Not the date of the report, not the date of the CoC meeting. Later market movement does not retrospectively change either number — though it very much changes what bidders will pay.
Fair value assumes proper marketing and a willing seller. Liquidation value assumes neither. That gap — time and compulsion — is the entire difference between them.
Neither is a floor price. More on that below, because it is the single most misunderstood point in the whole framework. Fair value vs liquidation value in depth →
The three asset classes
Valuation under the Code is not one exercise. It is three, run in parallel, by differently qualified people:
| Asset class | What it covers |
|---|---|
| Land and Building | Freehold and leasehold land, commercial, industrial and residential buildings — and in real estate cases, all inventory, whether under construction, completed, sold or unsold |
| Plant and Machinery | Every tangible asset other than land and buildings — manufacturing equipment, vehicles, computers, electronics, and for service businesses, office furniture and equipment |
| Securities or Financial Assets | Equities, bonds, treasuries, mutual funds, trade receivables, loans to subsidiaries and group companies — and intangibles: brands, trademarks, intellectual property, goodwill |
A registered valuer is registered for an asset class, and can only value within it. So a mid-sized manufacturer with land, a plant and a brand needs three separate pairs of valuers.
Note where intangibles sit — inside Securities and Financial Assets, alongside listed equity. That placement is doing a lot of work in a brand-led business, where the most valuable thing the company owns has never appeared on its balance sheet. Intangibles under IBC →
The appointment machinery
Regulation 27 puts the obligation on the RP: appoint the registered valuers who will determine fair value and liquidation value, within seven days of the RP's appointment, and not later than the forty-seventh day from the insolvency commencement date.
Read as two separate limits. The seven-day clock runs from your appointment; the 47-day clock runs from commencement. Where an RP is appointed late, or replaces an IRP, the outer limit is what binds.
Two sets, each with one valuer per asset class — so three asset classes means six appointments, with one valuer in each set designated the Coordinator Valuer. In practice the RP runs a selection process where candidates present their proposed methodology and fees to the CoC before appointment, which can mean twenty presentations inside the same window.
Relief for smaller debtors. Where the corporate debtor is an MSME, or has turnover up to ₹500 crore, the CoC may at its discretion engage a single registered valuer rather than two sets. The coordinator valuer and aggregated fair value →
Who cannot be appointed. The regulations disqualify a valuer who is a relative of the RP or a CoC member, who was the corporate debtor's statutory auditor in the preceding five financial years, or who holds any direct or indirect financial interest in the outcome. Appointments are disclosed, and pre-existing relationships must be declared up front. Valuer independence →
What happens when the two sets disagree
They will. Two competent professionals looking at the same plant will not produce the same number, and the framework accepts that.
Regulation 35 handles it. Each valuer computes estimates in accordance with International Valuation Standards — mandatory since 1 April 2026 — after physical verification of the inventory and fixed assets. The Coordinator Valuer in each set consolidates the three asset-class reports into one enterprise value, and the RP then averages the two sets' aggregated figures.
Where the variance between the two sets exceeds 25%, a third valuer is appointed. Within that threshold:
the average of the two aggregated estimates is taken as the fair value or the liquidation value.
Note what the comparison is between. It is two enterprise-level numbers, not two views of the same plant. Inconsistency between asset classes now has to be resolved by the coordinator inside the set, before it ever reaches the CoC. The 25% rule and how it is applied →
The better fix is upstream, and the framework now builds it in. Before valuation work begins in earnest, the RP must convene a meeting between the valuers and the CoC at which each valuer explains the methodology and key assumptions they propose to adopt. Where the CoC sees a material difference in approach, it can raise it before any number is finalised — which is far more effective than resolving a divergence afterwards.
Confidentiality is not a formality
The valuation numbers go to the CoC in electronic form, and only after members give the confidentiality undertaking the Code requires.
They do not go to resolution applicants. The reason is commercial, not procedural: a bidder who knows the liquidation value will bid at it. Disclosure converts the benchmark into a ceiling, and the statutory objective of value maximisation quietly dies.
Both the RP and the valuer carry independent confidentiality obligations. A leak from either — or from a CoC member — can suppress plan values and invites a challenge to the integrity of the entire process. Confidentiality and NDAs in CIRP →
What a defensible valuation report contains
The standard is straightforward to state and hard to meet: if the valuation cannot be explained to the Adjudicating Authority in plain language, with every number traceable to a source, an assumption or a stated professional judgment, it is not adequate.
In practice that means:
- the basis of value and the valuation date, stated explicitly;
- justification for the methodology chosen for each asset class, not merely its name;
- a clearly defined scope of work, including what was not examined and why;
- evidence of physical verification — photographs, site reports, dates;
- every assumption stated and justified, particularly where data was unavailable;
- sensitivity analysis showing how the number moves as key assumptions move;
- the valuer's Valuer Registration Number, with digital certification.
A valuation resting on undisclosed assumptions is not merely weak. It is legally defective, because nobody — not the CoC, not the Tribunal — can test it. Assumptions and sensitivity analysis →
What the numbers do not decide
Here is the point that surprises creditors most often: a resolution plan is not required to match or exceed either number.
The Supreme Court settled this in Maharashtra Seamless Ltd v. Padmanabhan Venkatesh — there is no statutory requirement that a plan offer more than the liquidation value. What the law requires is that the valuation underpinning the decision is methodologically sound, and that operational creditors receive at least their Section 53 entitlement.
The commercial judgment on whether to accept a plan belongs to the CoC. The line the courts have drawn, from Committee of Creditors of Essar Steel v. Satish Kumar Gupta onwards, is that commercial wisdom is very largely non-justiciable — but it has to rest on a credible foundation. Vague methodology, unjustified assumptions or a material item left out of the computation is exactly where a plan gets unwound.
So the valuation is not the decision. It is what makes the decision defensible. Judicial scrutiny of valuation reports →
Key takeaways
- Two sets of valuers, each with a Coordinator Valuer, appointed within 7 days of the RP's appointment and by the 47th day from commencement.
- Both values are fixed to the insolvency commencement date, not the report date.
- Three asset classes, each needing separately registered valuers — and intangibles sit with financial assets.
- Fair value is enterprise-level, expressly including intangibles and their underlying synergies.
- The CoC receives one aggregated number, not three.
- Variance above 25% between the sets triggers a third valuer.
- Numbers go to the CoC under confidentiality, never to bidders.
- A plan need not beat either number — but operational creditors must get their Section 53 entitlement.
- An unexplained assumption makes the valuation legally defective, however good the arithmetic.
Read next
- Fair Value vs Liquidation Value Under IBC
- CIRP Valuation Timeline: Regulation 27 and 35 Step by Step
- Registered Valuer Under IBC: Appointment, Duties and Liability
- Valuation of Intangible Assets Under IBC
- Corporate Insolvency Resolution Process (CIRP): Complete Guide
- Resolution Plan: Contents, Approval and Implementation
Disclaimer: Positions stated as on 5 September 2026 and reflect the February 2026 amendments to the CIRP and Liquidation Process Regulations. The Regulations and IBBI circulars are amended frequently — verify the current text on ibbi.gov.in before relying on any of it.