IBC / Insolvency Valuation

What is IBC valuation? Under the Insolvency and Bankruptcy Code, 2016, a Registered Valuer must determine both the fair value and liquidation value of the corporate debtor’s assets during the Corporate Insolvency Resolution Process (CIRP). Regulation 35 of IBBI (IRPCP) Regulations mandates two independent valuations, the average of which forms the basis for evaluating resolution plans. This valuation directly determines whether creditors accept a resolution plan or proceed to liquidation. Virtual Auditor’s IBBI registration (IBBI/RV/03/2019/12333) specifically qualifies us for these valuations. Quick Answer: IBC / Insolvency Valuation — IBC valuation by IBBI Registered Valuer. Fair value and liquidation value for CIRP under Regulation 35. Resolution plan viability. Going concern assessment for insolvency proceedings.

IBC / Insolvency Valuation is a service offered by Virtual Auditor, an AI-powered CA and IBBI Registered Valuer firm (IBBI/RV/03/2019/12333) led by CA V. Viswanathan (FCA, ACS, CFE, IBBI RV), specialising in IBBI-compliant valuations across 9 regulatory frameworks, from offices in Chennai, Bangalore, and Mumbai since 2012.

Source: IBBI Valuation Standards (2017), Companies (Registered Valuers and Valuation) Rules 2017 Official References: IBBI Registered Valuers ↗ · Companies Act ↗

Regulatory Framework

Regulatory basis: IBBI (Registered Valuers) Regulations, 2017. Companies (Registered Valuers and Valuation) Rules, 2017. IBBI Valuation Standards.

Fair Value vs. Liquidation Value in IBC

Dimension | Fair Value | Liquidation Value |

Assumption | Going concern — business continues | Forced sale — business ceases |

Methodology | DCF, comparable, asset-based (adjusted) | Asset-by-asset distressed sale |

Discounts | Market-level discounts (DLOM) | 30-60% forced sale discounts |

Timeline | Orderly sale (6-12 months) | Forced sale (1-3 months) |

Purpose | Benchmark for resolution plan evaluation | Minimum acceptable amount for creditors |

Typical gap | Reference value | 30-70% below fair value |

Indicative Fee Structure

IBC Valuation (Fair + Liquidation)

From \u20b91,00,000

Resolution Plan Viability Assessment

From \u20b975,000

*Prices are indicative. Actual fees depend on complexity, capital structure, and regulatory requirements. Contact us for a detailed quote.

Why Virtual Auditor?

4 credentials, 1 firm: FCA (financial expertise) + ACS (corporate governance) + CFE (forensic rigour) + IBBI RV (statutory valuation authority). This combination is rare in India and creates a multi-regulatory intersection that compliance aggregators cannot replicate.

AI-powered, not AI-dependent: Our proprietary tools — 18-method valuation engine, Monte Carlo simulator, anomaly detection algorithms — amplify expert judgment. Technology serves the professional; the professional does not serve the template.

3-city physical presence: Chennai (HQ at Spencer Plaza), Bangalore (MG Road), Mumbai (Goregaon West). We are not a virtual-only firm. Physical presence means in-person consultations, local RoC coordination, and regulatory office proximity.

Post-engagement continuity: Unlike aggregators who register your company and disappear, we provide ongoing compliance support — annual filings, statutory audit, tax planning, and when you raise funding, FEMA/FDI compliance and share valuation by the same team that incorporated you. Registration is day one; we walk the full journey.

Asset-by-Asset Liquidation Approach

Liquidation value requires a fundamentally different approach from going-concern valuation. Each asset class is valued separately under forced-sale assumptions:

Land and buildings: Market value with 20-40% distress discount depending on location, encumbrances, and market liquidity. Government guideline value as floor.

Plant and machinery: Depreciated replacement cost with 30-60% distress discount. Specialised equipment (single-purpose) faces higher discounts than general-purpose machinery. Scrap value as absolute floor.

Inventory: Realisable value depends on perishability, obsolescence, and market demand. Finished goods: 60-80% of cost. Work-in-progress: 30-50%. Raw materials: 70-90% (commodity-linked).

Receivables: Net realisable value after provision for doubtful debts. CIRP-stage receivables typically face 40-60% haircut due to customer reluctance to pay a company in insolvency.

Intangibles: Brand value and customer relationships may have zero liquidation value (no willing buyer in a forced sale). Patents and technology may retain value if transferable. Goodwill: nil in liquidation.

Investments: Listed investments at market value with distress discount. Unlisted investments valued recursively using same framework.

Resolution Plan Evaluation Framework

The Committee of Creditors evaluates resolution plans against the Regulation 35 valuation. A resolution plan must offer at least the liquidation value to operational creditors and dissenting financial creditors. The fair value serves as the aspirational benchmark.

Our reports include: (1) Clear fair value and liquidation value with methodology documentation, (2) Sensitivity analysis showing how changes in assumptions affect both values, (3) Asset-wise breakdown (critical for creditors evaluating whether to accept a plan or pursue liquidation for specific assets), (4) Going concern vs. piecemeal comparison — quantifying the value destruction from liquidation to demonstrate why resolution is preferable.

Timeline pressure: CIRP has a 180-day deadline (extendable to 330 days). Valuation must be completed within the first 75 days (Regulation 35A). We prioritise IBC engagements and deliver within statutory timelines, coordinating with the Resolution Professional throughout.

IBC Valuation Challenges and How We Address Them

IBC valuations present unique challenges that standard valuation engagements do not:

Data unreliability: Distressed companies often have incomplete, outdated, or manipulated financial records. Pre-CIRP management may have engaged in preferential transactions, asset stripping, or accounting irregularities. We apply forensic accounting techniques (CFE methodology) to assess data reliability before building valuation models on it.

Going concern uncertainty: The fundamental assumption of fair value — that the business continues operating — is inherently uncertain for a company in CIRP. We model probability-weighted scenarios: (a) successful resolution with existing operations, (b) resolution with operational restructuring (reduced capacity/markets), (c) resolution as a going concern but under new management, (d) liquidation. Each scenario gets a fair value and a probability weight.

Contingent liabilities: Companies in CIRP often have unquantified contingent liabilities — pending litigation, statutory dues under dispute, environmental remediation costs, employee claims. These affect both fair value (as a going concern with these liabilities) and liquidation value (where some claims may be extinguished or reduced in liquidation). We separately quantify and disclose contingent liabilities with probability-of-crystallisation estimates.

Stakeholder pressure: The Resolution Professional, Committee of Creditors, suspended management, operational creditors, and workmen all have interests in the valuation outcome. Our independence as IBBI Registered Valuers, combined with transparent methodology and sensitivity analysis, ensures the valuation serves its intended purpose — objective information for decision-making — without being influenced by any stakeholder.

People Also Ask

Why are two valuations required in IBC?

Regulation 35 mandates two independent Registered Valuer reports to ensure reliability. The average of the two fair values and two liquidation values forms the final estimates for the Committee of Creditors.

IBC Valuation Framework

Regulation 35, IBBI (IRPCP) Regulations, 2016: The Resolution Professional shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with Regulation 35. The average of the two valuations for each category (fair and liquidation) becomes the estimated value for the Committee of Creditors.

Fair Value

The estimated realisable value of assets if sold in a willing buyer-willing seller transaction, assuming both parties act knowledgeably, prudently, and without compulsion. This is a going-concern valuation — the business continues operating. Methods: DCF, comparable analysis, asset-based approaches adjusted for going concern.

Liquidation Value

The estimated realisable value if the corporate debtor’s assets are sold piecemeal in a forced/distressed sale. This assumes the business ceases operations. Significant discounts apply for distressed sale, time pressure, and market illiquidity. Typically 30–70% below fair value depending on asset type.

Resolution Plan Evaluation

The Committee of Creditors uses the fair value and liquidation value to evaluate resolution plans under Section 30. A resolution plan must provide creditors at least the liquidation value. The fair value serves as the benchmark for assessing the adequacy of the resolution amount.

⚡ How Virtual Auditor Delivers This Differently

For IBC valuations, our engine separately models going-concern (fair) and distressed-sale (liquidation) scenarios with asset-by-asset breakdown. Monte Carlo simulation quantifies the range of realisable values under different liquidation timelines. Tornado analysis identifies which assets drive the most variance between fair and liquidation values — critical for creditor negotiations.

Need Help With This?

Free 30-minute consultation with CA V. Viswanathan, FCA, ACS, CFE, IBBI RV. No obligation.

Step-by-Step Process

• 1

Step 1

Appointment by Resolution Professional

• 2

Step 2

Receive information memorandum and data

• 3

Step 3

Compute Fair Value (going concern)

• 4

Step 4

Compute Liquidation Value (piecemeal disposal)

• 5

Step 5

Submit both valuations within 7 days

• 6

Step 6

Support CoC in evaluation of resolution plans

When Is IBC / Insolvency Valuation Not Required?

Valuations may not be required when: (a) transactions are between wholly-owned group entities where no tax or regulatory event is triggered, (b) share transfers are at face value between existing shareholders with no FEMA/income tax implications, (c) the transaction falls below the de minimis threshold specified in the applicable regulation, or (d) the regulator has issued a specific exemption notification for the transaction type.

If you are unsure whether your situation requires ibc / insolvency valuation, contact us for a free preliminary assessment. We will advise you honestly — including telling you if you do not need our services.

What You Receive

Upon completion of the ibc / insolvency valuation engagement, you will receive: IBBI-format valuation report (typically 60-120 pages), executive summary with final value conclusion, detailed methodology explanation with assumptions and sensitivity analysis, compliance certificate confirming adherence to applicable valuation standards, and a management representation letter template.

All deliverables are reviewed by CA V. Viswanathan (FCA, ACS, CFE, IBBI RV) before release to ensure accuracy and regulatory compliance.

A Recent Client Engagement

A client approached Virtual Auditor with a complex situation involving multiple regulatory requirements and tight deadlines. Our team conducted a thorough analysis, identified the optimal compliance strategy, prepared all necessary documentation, and completed the engagement within the agreed timeline. The client benefited from our multi-disciplinary expertise and hands-on execution approach, achieving full regulatory compliance without any adverse observations or follow-up queries from authorities.

Documents You Will Need

To initiate this engagement, please keep the following documents ready: PAN card of the entity or individual, Aadhaar card of the authorised signatory, proof of business address (rent agreement with NOC or ownership document with latest utility bill), bank account details or cancelled cheque, and any existing registrations or approvals relevant to the engagement. A detailed personalised document checklist will be provided after the initial consultation.

Updated for FY 2025-26

This service page reflects the latest regulatory requirements as of March 2026, incorporating changes from the Union Budget 2025, recent MCA notifications, CBDT/CBIC circulars, and RBI master directions applicable to ibc / insolvency valuation. Virtual Auditor continuously monitors regulatory updates to ensure all advice and filings are current.

Who Needs IBC / Insolvency Valuation?

A valuation is required when: (a) shares are being issued or transferred to/from a non-resident under FEMA regulations, (b) shares are issued at a premium and need Rule 11UA compliance under the Income Tax Act, (c) the company is undergoing merger/demerger/slump sale requiring fair value assessment, (d) ESOPs are being granted or exercised requiring Ind AS 102 fair value computation, (e) insolvency proceedings require liquidation value or fair value under the IBC, or (f) any regulatory framework mandates an independent valuation by a registered valuer.

Penalties for Non-Compliance

Using incorrect or outdated valuations can result in: (a) rejection of FEMA filings by the AD bank, requiring fresh valuation and re-filing with potential late filing penalties, (b) income tax additions under Section 56(2)(x) for inadequate consideration, attracting tax at slab rate plus interest under Section 234A/B/C, (c) disqualification of the ESOP scheme for non-compliance with Ind AS 102, and (d) personal liability of directors for transactions at undervalued prices under Section 66 of the Insolvency Code.

Proactive compliance is always cheaper than penalty. Contact Virtual Auditor for a compliance health check to identify and address any gaps before they become liabilities.

Government Portal and Online Filing

Filings related to ibc / insolvency valuation are submitted through the relevant government portal. We handle all online filings on your behalf, including portal registration, form preparation, document upload, and acknowledgment tracking. You do not need to navigate the portal yourself — we manage the entire digital interface.