IBBI Notifies International Valuation Standards for All Valuations Under the Insolvency and Bankruptcy Code, 2016

1. Background and Regulatory Context

The Insolvency and Bankruptcy Code, 2016 (IBC / the Code) was enacted with, among others, the paramount objective of maximisation of value of assets of the corporate debtor in a time-bound manner. Valuation, therefore, is not a procedural formality — it is the commercial cornerstone of the entire insolvency resolution architecture.

Under the IBC framework, Registered Valuers (RVs) are required at multiple, critical junctures:

• Determination of Fair Value and Liquidation Value of the corporate debtor's assets during the Corporate Insolvency Resolution Process (CIRP).
• Asset valuation in Liquidation proceedings under Chapter III of Part II of the Code.
• Valuation under the Bankruptcy Process for Personal Guarantors to Corporate Debtors.
• Valuation under the Pre-Packaged Insolvency Resolution Process (PPIRP) for MSMEs.

Until this circular, the regulatory reference for valuation standards in IBC proceedings was broadly anchored to the Companies (Registered Valuers and Valuation) Rules, 2017 and certain 'internationally accepted standards,' which left room for interpretational inconsistency and methodological divergence across practitioners. The IBBI undertook a comprehensive review, beginning with the February 2026 amendment regulations, culminating in the present landmark circular.

2. The Regulatory Journey Leading to the Circular

To fully appreciate the significance of the 01 April 2026 circular, it is instructive to trace the sequence of regulatory reforms that preceded it:

The logical architecture is clear: the February 2026 amendments created the enabling framework. The 01 April 2026 circular then activated it by formally designating IVS as the governing standard. The two instruments work in tandem and must be read together.

3. What the Circular Mandates

The Core Direction

The IBBI has directed that all valuations conducted under the Insolvency and Bankruptcy Code, 2016, and the regulations made thereunder, shall henceforth be carried out in accordance with the International Valuation Standards (IVS), as issued and updated from time to time by the IVSC, until further orders.

Stated Rationale of the Board

The IBBI articulated three inter-connected pillars as the rationale for this reform:

1. Value Maximisation: Valuation forms the backbone of value maximisation under the Code, particularly in assessing liquidation value and fair value — both central to the resolution framework.
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3. Informed Decision-Making: Creditors and Resolution Professionals rely on valuations to evaluate resolution plans and make commercially rational decisions. Transparent, objective, and credible valuation is fundamental.
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5. Uniformity and Consistency: Adoption of a single, internationally recognised standard eliminates methodological ambiguity, promotes comparability, and strengthens stakeholder confidence.

4. What are the International Valuation Standards (IVS)?

The International Valuation Standards (IVS) are published by the International Valuation Standards Council (IVSC), an independent, not-for-profit standard-setting body headquartered in London, with over 170 member organisations in 137 countries. The IVS are structured as follows:

The IVS are widely regarded as the global benchmark for valuation practice. Their adoption by IBBI places India firmly within the mainstream of international insolvency valuation practice.

5. Impact on Key Stakeholders

A. Registered Valuers

This circular creates a direct and binding obligation on every Registered Valuer conducting assignments under the IBC:

• Every valuation report must explicitly reference and comply with the relevant IVS standards — particularly IVS 101 (scope), IVS 104 (basis of value), IVS 105 (methodology), and the relevant asset-class standard.
• Departures from IVS, if any, must be disclosed and justified — unexplained departures could constitute non-compliance.
• Documentation and working papers must meet the evidentiary requirements of IVS 102.
• IVS 200 becomes the governing standard for business valuation assignments — relevant for the vast majority of IBC mandates involving corporate debtors.

B. Resolution Professionals (RPs)

• RPs must ensure appointment letters and engagement terms require IVS compliance from the outset.
• When evaluating valuation reports for submission to the CoC, RPs should check for explicit IVS references and methodological disclosure.
• Divergence in values between two valuers must be examined in light of whether it arises from legitimate IVS methodological differences or from non-compliance.

C. Committee of Creditors (CoC)

• Standardised IVS-compliant reports will promote better comparability across mandates and support more informed commercial decision-making.
• Reduced disputes over valuation methodology are anticipated given IVS's precision and disclosure requirements.

D. Registered Valuer Organisations (RVOs)

• RVOs must align their training syllabi, CPE programmes, and examination content with the IVS framework.
• RVOs already holding IVSC membership will be better positioned to facilitate this transition.

E. NCLT and Appellate Bodies

• IVS-compliant reports will provide NCLT and NCLAT a clearer reference framework when valuation is challenged.
• Greater standardisation is expected to reduce litigation over valuation methodology.

6. Key IVS Concepts Relevant to IBC Valuations

Basis of Value (IVS 104)

Under IVS 104, different bases of value produce different estimates. The two most relevant to IBC are:

• Market Value — the estimated amount for which an asset would exchange on the valuation date between a willing buyer and willing seller in an arm's length transaction. This broadly aligns with Fair Value under IBC.
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• Liquidation Value — the amount that would be realised when an asset or group of assets are sold on a piecemeal basis, either in an orderly or forced manner. IBC's Liquidation Value concept draws directly from this.

Valuation Approaches (IVS 105)

IVS 105 recognises three approaches: Market, Income, and Cost. All three remain permissible. However, IVS 105 requires the valuer to:

• Consider all three approaches and, where appropriate, apply multiple methods.
• Justify the weighting given to each approach when reconciling to a final value conclusion.
• Disclose and reason any material departures from standard methodology.

Scope of Work and Reporting (IVS 101 and IVS 103)

IVS 101 mandates a clearly defined scope of work — purpose, basis, valuation date, subject assets, and assumptions — agreed before commencement. IVS 103 requires the report to be clear, accurate, not misleading, and to contain all material matters needed by the intended user. These requirements will significantly elevate the quality and rigour expected of IBC valuation reports.

7. Practical Compliance Checklist for Registered Valuers

8. Significance in a Global Context

India's insolvency framework, since its inception in 2016, has been benchmarked against international best practices. The adoption of IVS by IBBI for IBC valuations is consistent with several other major jurisdictions — including Australia, Canada, Hong Kong, South Africa, and various EU member states — that have formally adopted or recognised IVS within their legal frameworks.

For India specifically, this move carries three dimensions of significance:

1. Investor Confidence: International investors and foreign creditors can now rely on a familiar and trusted standard when assessing valuations in Indian insolvency proceedings.
2. Cross-Border Insolvency: As India's engagement with cross-border insolvency deepens, IVS-aligned valuations will be more readily accepted by foreign courts and administrators.
3. Professional Elevation: Mandatory adoption of IVS raises the bar for Registered Valuers and incentivises deeper professional engagement with global valuation methodology — ultimately strengthening the valuation profession in India.

9. Areas Requiring Further Clarification

• Valuation Report Format: The IBBI has yet to publish the prescribed valuation report format referenced in the amended regulations. Practitioners should monitor for this supplementary notification.
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• Transitional Assignments: Valuations commenced before 01 April 2026 but still in progress will need careful handling regarding IVS applicability.
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• Definitional Conflict: Where IVS definitions diverge in nuance from IBC/regulatory definitions (e.g., Liquidation Value under IVS 104), authoritative guidance from IBBI or the courts will be needed.
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• Training and Transition: Given the immediate-effect nature of the circular, IBBI or RVOs may need to facilitate rapid upskilling among practitioners less familiar with IVS.

10. Conclusion

The IBBI circular dated 01 April 2026 is, without exaggeration, one of the most consequential regulatory developments in the Indian valuation profession in recent years. By formally notifying IVS as the governing standard for all IBC valuations, the Board has achieved three things simultaneously: it has closed the door on methodological uncertainty, elevated the evidentiary quality of valuation reports entering the insolvency ecosystem, and aligned India's insolvency valuation framework with global best practice.

For Registered Valuers, this is not merely a compliance update — it is an invitation to deepen professional mastery. For Resolution Professionals and creditors, it is an assurance that valuations relied upon for billion-rupee decisions will adhere to a rigorous, internationally benchmarked standard. And for the insolvency ecosystem as a whole, it is a building block in the larger edifice of value maximisation that the Code set out to construct.

Practitioners, RVOs, and all stakeholders in the insolvency resolution space would be well-advised to study the IVS framework — particularly IVS 101–105 and the relevant asset-class standards — without delay.

Tags: IBC 2016  |  IBBI Circular |  Registered Valuer  | IVS  |  IVSC |  CIRP  | Liquidation Value  |  Fair Value |  Valuation Standards

Link: https://ibbi.gov.in/uploads/legalframwork/b176b05d02cba50ae0d3279ff6ed553e.pdf