IBBI Mandates International Valuation Standards for All Valuations Under the Insolvency Code
Introduction
The Insolvency and Bankruptcy Board of India (IBBI) has issued a circular mandating the adoption of the International Valuation Standards (IVS) for all valuations undertaken under the Insolvency and Bankruptcy Code, 2016, with immediate effect and until further orders.
Factual Background
The circular has been issued in the context of the Insolvency and Bankruptcy Code’s objective of maximisation of the value of the assets of the corporate debtor in a time-bound manner. The IBBI noted that valuation is a critical input in the insolvency resolution process, as it directly impacts the evaluation of resolution plans and enables stakeholders, including creditors and resolution professionals, to make informed decisions. The Board emphasized that transparent, objective, and credible valuation is fundamental to the effective functioning of the insolvency ecosystem.
Procedural Background
By way of the circular dated 1 April 2026, the IBBI formally notified that the International Valuation Standards, as issued and updated from time to time by the International Valuation Standards Council, shall be the applicable standards for all valuations conducted under the Code and the regulations framed thereunder. The circular came into force from the date of its issuance.
Issues
1. Whether a uniform valuation standard should govern all valuations under the Insolvency and Bankruptcy Code.
2. What standards are to be followed by valuers conducting asset valuation under the IBC framework.
Contentions of Parties
The circular is regulatory in nature and does not arise out of adversarial litigation. The IBBI’s position is that consistent and internationally recognized valuation standards are necessary to ensure transparency, objectivity, and credibility in the insolvency resolution process. Such uniformity is intended to strengthen stakeholder confidence and improve the quality of decision-making during CIRP, liquidation, and related proceedings.
Reasoning and Analysis
The IBBI reasoned that valuation forms the backbone of value maximisation under the Code, particularly in assessing liquidation value and fair value, both of which are central to the resolution framework. Inconsistent or subjective valuation methodologies can undermine the integrity of the insolvency process and adversely affect creditors’ recoveries. By adopting the International Valuation Standards, the Board seeks to align Indian insolvency practice with globally accepted norms, thereby promoting standardisation, reliability, and comparability across valuations. The use of IVS also ensures that updates and refinements made by the International Valuation Standards Council automatically inform domestic insolvency valuations.
Decision
The IBBI 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, as updated from time to time, until further orders.