IBBI RELEASES EXPERT COMMITTEE REPORT PROPOSING MAJOR POLICY REFORMS FOR VALUATION UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

A DETAILED ANALYSIS AND INDUSTRY UPDATE BY THE COUNCIL OF ENGINEERS AND VALUERS (CEV)

New Delhi, November 2025 — In a significant development with far-reaching implications for India’s insolvency ecosystem, the Insolvency and Bankruptcy Board of India (IBBI) has released the much-anticipated Report of the Expert Committee constituted under Office Order No. RVO-16/2/2025-IBBI dated 2 July 2025.
This committee was entrusted with reviewing and recommending comprehensive reforms to strengthen the valuation framework under the Insolvency and Bankruptcy Code (IBC), 2016.

Valuation has been a critical and sensitive component within the insolvency resolution process, often determining the course of revival or liquidation of distressed companies. The newly released report addresses structural gaps, inconsistencies, and operational challenges that valuation practitioners, creditors, and resolution professionals have faced over the years.

Mandate of the Expert Committee: Issues Examined

The committee was tasked with examining key aspects of valuation under the IBC and suggesting policy interventions. Its mandate covered the following major areas:

a) Standardisation of Valuation Report Format & Documentation

The committee was asked to:

Prescribe a uniform valuation report format
Define mandatory documentation
Streamline the valuation workflow for all assignments conducted under the IBC

This aims to eliminate inconsistencies between valuers and enhance comparability across reports.

b) Review of Definition of ‘Fair Value’ and ‘Liquidation Value’

The definitions under the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 were re-examined to:

Remove interpretational ambiguities
Improve alignment with global standards
Ensure consistent application in complex distress scenarios

These definitions have historically been central to disputes and litigation, making their clarity essential.

c) Feasibility of Appointing a Single Registered Valuer

The committee explored whether:

One valuer, instead of two, could be appointed for corporate debtors up to a certain asset size
This could improve efficiency, reduce costs, and minimize valuation disagreements

This proposal marks a potential shift from the dual-valuer system currently followed in corporate insolvency resolution processes (CIRP).

d) Any Other Matters Connected to Valuation under the Code

The committee was empowered to evaluate ancillary issues such as:

Risk disclosures
Documentation standards
Methodology transparency
Valuer independence and conflict-of-interest norms
Use of technology and digital documentation

Key Recommendations of the Expert Committee

The report presents comprehensive recommendations designed to enhance transparency, credibility, and uniformity in valuations carried out under the IBC. Some major recommendations include:

1. Uniform Valuation Report Format

A structured, standardised report template has been proposed, covering:

Executive summary
Scope and purpose
Methodologies applied and their rationale
Assumptions, limitations, caveats
Detailed workings
Market trends, recoverability considerations, and risk assessments

This uniformity is expected to reduce confusion and improve stakeholder confidence.

2. Revised Definitions of Fair Value and Liquidation Value

The committee suggests:

Updated definitions aligned with international valuation principles
Greater clarity on what constitutes market participants, distressed assumptions, and liquidation scenarios
Improved alignment with real-market behaviour

These revisions are aimed at resolving definitional disputes that often reach adjudicating authorities.

3. Single Valuer System for Smaller Corporate Debtors

The report recommends:

Appointing one Registered Valuer for companies below a prescribed asset threshold
Retaining the two-valuer mechanism for larger or more complex cases

This is expected to streamline valuation timelines and reduce cost burdens.

4. Enhanced Documentation & Justification Requirements

Valuers will be mandated to maintain:

A comprehensive trail of data sources
Justification of methodologies
Evidence-based assumptions
Disclosures on material risks, challenges, and uncertainties

Such documentation reduces the scope for ambiguity and strengthens legal defensibility.

5. Conflict of Interest Disclosures

To reinforce independence and transparency:

Strict declarations of conflict of interest will be required
Prior relationships or financial interests must be disclosed

This aligns with global best practices in valuation governance.

6. Strengthening Professional Accountability

The report proposes:

Greater responsibility on valuers to ensure diligence
Mandatory compliance with valuation standards
Possible disciplinary pathways for non-compliance

Impact on the Insolvency Ecosystem

The recommendations of the Expert Committee are expected to have a substantial positive impact:

For Creditors

Easier comparison of valuation reports
Better understanding of risks and assumptions
Reduced disputes and litigation

For Investors and Resolution Applicants

Clearer insights into distressed asset values
More reliable information for designing resolution plans

For Registered Valuers

Defined expectations and uniform templates
Reduced ambiguity in methodology and reporting
Enhanced professional credibility

For Adjudicating Authorities

Minimisation of valuation-related disputes
More defensible and technically robust reports

The Council of Engineers and Valuers (CEV) acknowledges that these reforms will significantly strengthen the country’s valuation ecosystem by ensuring consistency, transparency, professional rigour, and stakeholder trust.

CEV View: A Transformational Step Towards Strengthening Valuation Culture in India

CEV recognises that valuation under the IBC is not merely a technical exercise but a decisive factor influencing the financial recovery of creditors and the survival of distressed companies.
The Expert Committee’s recommendations provide a path toward:

Greater standardisation
Improved professional accountability
Enhanced data reliability
Reduction in litigation
Faster and more efficient resolution processes

If adopted, these reforms will serve as a paradigm shift in India’s insolvency framework, ultimately contributing to better recovery outcomes and stronger institutional confidence.