IBBI PROPOSES STANDARDISED ASSET VALUATION FORMAT TO REDUCE LITIGATION AND STRENGTHEN BANKRUPTCY RESOLUTION

A Detailed Information Update by the Council of Engineers and Valuers (CEV)

New Delhi, November 2025 — In a significant policy development expected to reshape the framework of insolvency valuation in India, the Insolvency and Bankruptcy Board of India (IBBI) has released a proposal for a uniform valuation report format for all professionals undertaking valuations under the Insolvency and Bankruptcy Code (IBC), 2016.
The objective: to enhance credibility, reduce inconsistencies, and minimise litigation arising out of valuation disputes in bankruptcy cases.

This move follows years of concerns expressed by stakeholders regarding variations in valuation reports, lack of uniform documentation, and frequent legal challenges questioning the methodology and professional judgement applied by Registered Valuers (RVs).

Why a Standardised Valuation Format Now?

Valuation has long been recognised as one of the most critical components of the insolvency resolution process. The value assigned to a distressed enterprise directly influences key decisions such as:

• Whether revival of the corporate debtor is feasible

• Determination of liquidation value and fair value

• Assessment of recovery potential for creditors

• Negotiations with potential investors

Given the high stakes, valuation reports have become central documents in insolvency proceedings. However, non-standardised formats and insufficient disclosures have often resulted in valuation reports becoming the subject of litigation, delaying resolution and creating uncertainty.

The newly proposed guidelines aim to eliminate ambiguities, ensure uniformity, and mandate rigorous documentation, thereby fortifying the integrity of the valuation process.

What the Draft Format Requires: Key Enhancements

According to the IBBI’s proposal, the new format significantly expands the scope of disclosures and documentation required from valuation professionals. Key features include:

1. Enhanced Risk Disclosures

Valuers must explicitly state:

• The risks involved in the valuation

• Limitations affecting the assessment

• Sensitivities around assumptions or market conditions

2. Conflict of Interest Declarations

To promote independence and trust, valuers must clearly disclose:

• Any personal, professional, or financial interests

• Any prior association with the corporate debtor or stakeholders

3. Documentation and Evidence Requirements

The proposed guidelines mandate that valuation reports must be backed by:

• Adequate on-ground data

• Verified financial and operational records

• Supporting documents for assumptions and methodologies adopted

4. Standardised Structure for the Valuation Report

The new report format will include:

• Executive summary

• Scope of valuation

• Methodology applied and rationale

• Key assumptions and limitations

• Detailed working papers

• Market trends and economic influences

• Asset-class specific schedules

5. Focus on Recoverability Factors

The guidelines instruct valuers to consider:

• Cost of recovery

• Prevailing economic conditions

• Potential impairments

• Liquidity of assets

Given the growing complexity of insolvency cases, this structured format is expected to bring consistency and clarity across all report submissions.

Industry Experts Welcome the Move

The valuation community and insolvency ecosystem have largely welcomed the reforms.

“The new guidelines will bring consistency, transparency, and standardisation, resulting in valuation reports that are well-reasoned and backed by sufficient evidence. They will significantly improve the quality of decision-making for resolution professionals.”

Another senior valuation professional echoed this sentiment, emphasising that while the standardised format will drastically improve efficiency and reduce disputes, real-world challenges persist:
“The proposal is a welcome step that will elevate transparency and credibility. It will also reduce disagreements of the kind seen in cases like Ramkrishna Forgings Ltd. and other high-profile insolvency matters. However, complexities in data availability, distressed-asset behaviour and uncertain market conditions remain ongoing challenges for valuers.”

Reducing Litigation and Strengthening Creditor Confidence

The IBBI noted that the introduction of a uniform valuation structure is critical, especially as valuation reports have often been scrutinised in courts during bankruptcy cases.
A structured, comprehensive report backed by standardised disclosures is expected to:

• Reduce valuation-related disputes

• Improve comparability among reports

• Enhance investor confidence

• Facilitate faster and more informed negotiations

• Assist creditors in achieving better recoveries

The Council of Engineers and Valuers (CEV) emphasised that a more accurate, evidence-backed, and standardised valuation document will provide creditors with a clearer picture of the corporate debtor’s financial standing, ultimately enabling better recovery outcomes.

Public Comments Invited Until 10 December 2025

To ensure broad stakeholder participation, IBBI has invited public comments on the proposed format until 10 December 2025.

Stakeholders can submit feedback through the “Public Comments” section on the IBBI website by selecting the relevant discussion paper, stakeholder category, and specifying whether their comments are general or specific.

Given the profound impact of valuation quality on insolvency outcomes, CEV encourages all Registered Valuers, RVOs, insolvency professionals, financial creditors, academics, and practitioners to positively contribute to shaping the final guidelines.

A Transformational Step for India’s Insolvency Ecosystem

The proposed standardised valuation format marks a landmark effort by IBBI to strengthen the credibility, transparency, and uniformity of the valuation ecosystem under the Insolvency and Bankruptcy Code.
If implemented effectively, it can significantly streamline the resolution process, reduce litigation, and support more robust decision-making by all stakeholders.

As a professional body committed to advancing valuation excellence, the Council of Engineers and Valuers (CEV) recognises the proposal as a timely and progressive step that will ultimately enhance the reliability and integrity of the insolvency framework in India.

IBBI Issues Draft Guidelines for Conducting Valuation Under the Insolvency and Bankruptcy Code, 2016