Who Can Conduct Valuation Under the IBC, 2016?

When a company enters insolvency, nobody can plan a rescue or a sale without knowing what its assets are worth. The Insolvency and Bankruptcy Code, 2016 (IBC) therefore builds valuation into the process. It also says clearly who may do the work. The short answer is a Registered Valuer, and the details matter because a report from the wrong person can be challenged by creditors, bidders or the Tribunal.

Why Valuation Matters Under the IBC

Two moments call for valuation. In the Corporate Insolvency Resolution Process (CIRP), the resolution professional needs to know what the company is worth as a going concern and what its assets would fetch if sold off. The committee of creditors uses these figures to judge whether a resolution plan is a fair offer. In a liquidation, the liquidator values assets to plan their sale and to distribute proceeds under the Code's priority order.

Who Can Conduct the Valuation

Valuations under the IBC are done by a Registered Valuer, meaning a person registered under Section 247 of the Companies Act, 2013 and the Companies (Registered Valuers and Valuation) Rules, 2017, and regulated by the Insolvency and Bankruptcy Board of India (IBBI). Registration is by asset class: Land and Building, Plant and Machinery, or Securities or Financial Assets. IBBI also maintains a list of registered valuer entities, which are firms or companies registered to carry out valuations, so check the current IBBI register to see how the valuer is registered.

A Chartered Accountant, merchant banker or general property appraiser who is not a Registered Valuer cannot do this work, whatever their experience.

Who Appoints the Valuer

• During CIRP: the resolution professional appoints the valuers.
• During liquidation: the liquidator appoints them.

The committee of creditors does not appoint the valuer directly, although it can ask questions about the valuation and the valuer's work.

What the Regulations Require in CIRP

The CIRP Regulations, 2016 require the resolution professional to appoint two Registered Valuers, within a stated period after taking charge, to determine two values:

• Fair value: the estimated realisable value of the assets in an orderly transaction between willing parties, at arm's length, on the insolvency commencement date
• Liquidation value: the estimated realisable value if the company were to be liquidated on that date

The two valuers should be of the same asset class as the assets being valued. Where their estimates differ materially, the regulations provide a route for a third valuer, and the final figure is derived from the estimates. The valuation date is the insolvency commencement date. The details, including timing and the averaging mechanism, are in the regulations as amended, so check the current text.

Independence and Conflict Rules

The regulations require the valuer to be independent. In broad terms, a valuer cannot be appointed if they are a related party of the corporate debtor, or if they have a conflict of interest, or if they are connected with the resolution professional in ways the regulations prohibit. The valuer must also follow the valuation standards and the code of conduct under the Rules.

Confidentiality

Valuation reports in insolvency are sensitive, because bidders could use them to anchor offers. The regulations generally restrict who sees them. Members of the committee of creditors and resolution applicants are typically given access, subject to confidentiality undertakings. The valuers' reports are not for general circulation.

Liquidation Valuation

In liquidation, the Liquidation Process Regulations, 2016 provide for the liquidator to value assets using Registered Valuers, with the valuation informing the reserve price in sales by auction or private sale. Take care here: the CIRP Regulations and the Liquidation Process Regulations are separate instruments with their own numbering, so check which one a provision comes from.

Conclusion

Under the IBC, valuation is a regulated step carried out by independent Registered Valuers, appointed by the resolution professional or liquidator. Confirm their registration and asset class on the IBBI register before appointment, check for conflicts, and keep the valuation date and confidentiality rules in view. Regulations are amended regularly, so confirm the current provisions with an insolvency professional.