Archive · 16 Nov 2025
Government Plans Overhaul of Bankruptcy Valuation Rules
Imagine a company is in trouble and needs to be valued for sale.
The government wants to make sure the people valuing it do a better job.
Right now, they sometimes only look at the physical things, like buildings, and forget about the company's good name, ideas, or how many customers it has.
The government wants to create new rules so that the valuers look at everything, the whole picture, to get a fairer price.
They also want to make the rules clearer so everyone does it the same way.
For smaller companies, they might only need one expert to do the valuation instead of two, to save time and money.
The goal is to make sure these troubled companies are valued accurately and that the process is trustworthy.
Government plans to revise valuation norms under the Insolvency and Bankruptcy Code (IBC).
The aim is to ensure intangible assets like brand value and goodwill are fully captured in valuations.
IBBI proposes a single set of harmonized valuation standards for consistency and professionalism.
A shift to a 'holistic valuation' method is suggested, moving away from asset-specific assessments.
Proposal to allow a single valuer for smaller companies to streamline the insolvency process.
- Who
- The Indian government and the Insolvency and Bankruptcy Board of India (IBBI)
- What
- Planning to revise valuation norms under the Insolvency and Bankruptcy Code (IBC)
- When
- Disclosed in a discussion paper by IBBI
- Where
- India
- Why
- To address inconsistencies, lack of uniformity, and undervaluation of intangible assets in the current valuation process for distressed companies.
Proposing a Single Set of Standards
Current Dual-Valuer System
Valuation Standards
Proposing a Single Set of Standards
Proposing a single set of harmonized valuation standards to ensure consistency, reliability, and professionalism across all types of valuations under the IBC.
Current Dual-Valuer System
Current system lacks uniformity and consistency, leading to issues in valuation.
Valuation Method
Proposing a Single Set of Standards
Shifting to a 'holistic valuation' method to better capture the debtor’s commercial and economic value, including intangible assets.
Current Dual-Valuer System
Current asset-specific estimates often undervalue intangible assets and the going-concern value.
Number of Valuers
Proposing a Single Set of Standards
Proposing allowing resolution professionals to appoint a single valuer per asset class for companies below a specified threshold to reduce costs and speed up the process.
Current Dual-Valuer System
Existing rules mandate two valuers, increasing costs and slowing down insolvency for smaller companies.
- Governing Body
- Insolvency and Bankruptcy Board of India (IBBI)
- Legislation
- Insolvency and Bankruptcy Code (IBC), 2016
- Proposed Change
- Revise valuation norms, capture intangible assets, and give IBBI greater authority.
- Current Valuation Process
- Two registered valuers appointed to determine fair and liquidation values.
- Proposed Change to Valuers
- Allow a single valuer for companies below a threshold, unless Committee of Creditors decides otherwise.
- Goal of Changes
- Ensure consistency, reliability, professionalism, and accurate valuation of distressed companies.