Fresh guidelines to simplify valuation for insolvent firms

WITH A VIEW to prescribe a standardised format to prepare a valuation report for an insolvent company, the Insolvency and Bankruptcy Board of India (IBBI) has proposed fresh guidelines for conducting valuation under the Insolvency and Bankruptcy Code (IBC), 2016.

- MANU KAUSHIK

In a discussion paper, the board said that these guidelines are intended to promote consistency, transparency, and standardisation in valuations carried out under the IBC. “The objective is to ensure that valuation reports are comprehensive, supported by adequate documentation, and prepared through a structured and well-reasoned assessment of the assets of the corporate debtor,” the paper said.

At present, registered valuers (RVs) do not follow a standardised format while preparing a valuation reports. These reports often lack details on methodologies, assumptions and data sources employed by the valuers which results in inconsistencies, and lack of comparability.