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.

Regulatory Framework

Regulatory basis: Section 247 of the Companies Act, 2013 read with the Companies (Registered Valuers and Valuation) Rules, 2017; ICAI Valuation Standards, 2018 and International Valuation Standards.

Fair Value vs. Liquidation Value in IBC

Indicative Fee Structure

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

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.

Engagement terms — reviewed 25 October 2026

• Fee: From ₹1,00,000 + 18% GST per report (fair value and liquidation value, securities or financial assets class).
• Extra / not included: Site visits and third-party asset-class valuers (land and building, plant and machinery) are separate.
• Turnaround: Agreed with the resolution professional in the engagement letter, counted in working days from receipt of complete information and the advance payment.
• Who signs: The report is signed by V. Viswanathan, IBBI Registered Valuer (IBBI/RV/03/2019/12333).
• Entity: Engagement letter and invoice are issued by V Viswanathan & Associates (proprietor V. Viswanathan, IBBI Registered Valuer, IBBI/RV/03/2019/12333); the Registered Valuer is appointed and signs in his personal capacity, not through a company.
• What to send first: Send appointment letter from the RP/liquidator, information memorandum, latest accounts and the asset register.
• Next step: Send your enquiry on WhatsApp to +91 99622 60333; we confirm the scope, fee and timeline in writing before work starts.

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.

Need Help With This?

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

Step-by-Step Process

Step 1

Appointment by Resolution Professional

Step 2

Receive information memorandum and data

Step 3

Compute Fair Value (going concern)

Step 4

Compute Liquidation Value (piecemeal disposal)

Step 5

Submit both valuations within 7 days

Step 6

Support CoC in evaluation of resolution plans

When Is IBC / Insolvency Valuation Not Required?

A separate registered valuer report under IBC may not be required when: (a) the CIRP has been withdrawn under Section 12A with 90% CoC approval, (b) the NCLT has dismissed the insolvency application and no CIRP is ongoing, (c) the company has settled all claims before the constitution of the CoC, or (d) the matter is being resolved through pre-packaged insolvency (PPIRP has different valuation requirements). During active CIRP, registered valuer appointment is mandatory under Section 35.

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

Our approach: Appointed as registered valuer under IBC Section 35 for a resolution process — a mid-sized steel company admitted to CIRP with claims of ₹280 Cr. We conducted liquidation value assessment (forced sale of assets) and fair value assessment (going concern basis). Physical verification of 3 plant locations, independent verification of ₹45 Cr inventory, analysis of 12 secured creditors' security interests, and enterprise value computation using comparable EV/EBITDA multiples from 5 recent steel sector resolutions.

Outcome: Fair value: ₹190 Cr. Liquidation value: ₹95 Cr. Resolution plan approved by CoC at ₹165 Cr (87% of fair value). NCLT accepted the valuation without challenge from any stakeholder. Report delivered within the 47-day statutory deadline. Dissenting creditors' objections on valuation methodology dismissed by NCLT citing our comprehensive approach.

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.

What has changed in the law — reviewed October 2026

• Income-tax Act, 2025: assented to on 21 August 2025 and in force from 1 April 2026, it replaces the Income-tax Act, 1961 for tax year 2026-27 onward, and the Income-tax Rules, 2026 (notified 20 March 2026) replace the 1962 Rules. Section and rule numbers on this page are those of the 1961 Act and 1962 Rules, which continue to govern assessments, appeals and pending proceedings for assessment years up to 2026-27; for tax year 2026-27 onward the corresponding provisions of the 2025 Act apply, and our engagement letters quote both.