IBBI Issues Guidelines for Valuation under the IBC, 2016
IBBI Issues Guidelines for Valuation under the Insolvency and Bankruptcy Code (IBC), 2016
Valuation plays a crucial role in proceedings conducted under the Insolvency and Bankruptcy Code, 2016 (IBC). Accurate and well-supported valuation reports contribute significantly to transparency, consistency, credibility, and informed decision-making throughout insolvency and bankruptcy processes. Such reports are instrumental in facilitating value maximisation and ensuring stakeholder confidence.
To strengthen the quality and uniformity of valuation practices, the Insolvency and Bankruptcy Board of India (IBBI) has prescribed comprehensive Guidelines for Conducting Valuation under the Insolvency and Bankruptcy Code, 2016.
Recent amendments to various regulations governing Corporate Insolvency Resolution Processes, Liquidation, Voluntary Liquidation, Pre-Packaged Insolvency Resolution Processes, and Bankruptcy Processes for Personal Guarantors require registered valuers to prepare valuation reports and maintain supporting records in a format specified by the Board through a circular.
The newly issued guidelines establish a structured framework for valuation assignments under the Code and are divided into three parts:
Part I outlines the general requirements applicable to registered valuers, including documentation standards, minimum contents of valuation reports, factors to be considered while valuing receivables, and responsibilities towards the designated coordinating valuer.
Part II provides asset-specific reporting formats to ensure consistency and completeness in valuation reporting across different classes of assets.
Part III sets out the framework and responsibilities for coordinating valuers in determining the fair value of the corporate debtor during insolvency proceedings.
All registered valuers appointed under the Insolvency and Bankruptcy Code and related regulations are required to prepare valuation reports and maintain records in accordance with these guidelines.
The guidelines become effective from the date of issuance of the circular and shall apply to all valuation assignments undertaken under the Code thereafter.
The circular has been issued by the IBBI in exercise of its powers under Section 196 of the Insolvency and Bankruptcy Code, 2016 and the regulations framed thereunder.
