1. Overview
A Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016 ("the Code") depends on a credible, arm's-length view of what the corporate debtor's assets are actually worth. Two distinct measures are required for this purpose — Fair Value and Liquidation Value — and both are determined by Registered Valuers under a framework that draws together Section 247 of the Companies Act, 2013 and the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"), in particular Regulation 27 and Regulation 35. These values do more than support the Resolution Professional's internal record-keeping; they form the benchmark against which the Committee of Creditors evaluates resolution plans, and against which the adequacy of any eventual outcome is tested.
2. Regulatory Framework
2.1 Section 247, Companies Act, 2013. Section 247 provides that wherever a valuation is required under the Companies Act, 2013 in respect of any property, stocks, shares, debentures, securities, goodwill, net worth or liabilities of a company, that valuation must be carried out by a person registered as a valuer, in the manner prescribed. The Companies (Registered Valuers and Valuation) Rules, 2017 operationalise this requirement, and the Ministry of Corporate Affairs delegated the functions relating to registered valuers to the Insolvency and Bankruptcy Board of India (IBBI) by notification dated 23 October 2017. This is the foundation on which valuations conducted during CIRP are required to be performed only by valuers registered with the IBBI.
2.2 Regulation 27 – Appointment of Registered Valuers. Regulation 27 of the CIRP Regulations requires the Resolution Professional to appoint two Registered Valuers, within seven days of their own appointment and not later than the forty-seventh day from the insolvency commencement date, to determine the fair value and liquidation value of the corporate debtor in accordance with Regulation 35. The Regulations also prescribe independence conditions on who may be appointed, restricting, among others, a person who has served as auditor of the corporate debtor within a specified preceding period, or who is otherwise connected with the Resolution Professional or the insolvency professional entity of which the Resolution Professional is a partner or director.
2.3 Regulation 35 – Fair Value and Liquidation Value. Regulation 35 sets out how the valuation is to be carried out. The two Registered Valuers independently submit their estimates of fair value and liquidation value, computed in accordance with internationally accepted valuation standards, after physical verification of the corporate debtor's inventory and fixed assets. Where the Resolution Professional considers the two estimates significantly different, a third valuer may be appointed, and the average of the two closest estimates is then treated as the applicable fair value or liquidation value. The Regulation also imposes confidentiality obligations: the values are not disclosed generally, and once resolution plans are received, they are shared with Committee of Creditors members electronically only against an undertaking of confidentiality and non-misuse, consistent with the requirements of Section 29(2) of the Code.
3. What Our Advisory Support Involves
Vallore Advisory LLP works alongside Resolution Professionals and their teams during this stage of the CIRP, without acting as, or being appointed as, a Registered Valuer under Section 247. The role is to support the process around the statutory valuation — helping track timelines for appointment and submission under Regulation 27, reviewing the assumptions and methodology disclosed in valuation reports for internal consistency, assisting in the reconciliation exercise where the two estimates diverge, and preparing clear, decision-ready analyses of fair value and liquidation value for presentation to the Committee of Creditors. Where relevant, this can extend to sensitivity review of key asset classes, comparison of resolution plan terms against the valuation benchmarks, and coordination between the appointed valuers, the Resolution Professional and other advisors engaged in the process.
4. Why Fair Value and Liquidation Value Determination Matters
Fair value provides a reference point for what the corporate debtor's assets could realistically fetch in an orderly, arm's-length transaction, while liquidation value indicates the floor recovery if the process were to end in liquidation rather than resolution. Together, these figures give the Committee of Creditors an objective yardstick against which competing resolution plans are assessed, and they bear directly on the thresholds a plan must meet to be considered viable. Inconsistencies or unexplained divergence between the two valuers' estimates can delay Committee deliberations, invite challenge before the National Company Law Tribunal, or expose the process to allegations of undervaluation. A disciplined, well-documented approach to this stage has a direct bearing on the credibility of the eventual resolution outcome.
5. When This Advisory Is Required
Support of this nature is typically most useful from the point a Resolution Professional is appointed, running through the appointment of Registered Valuers, receipt of their estimates, any reconciliation or third-valuer process under Regulation 35, and the eventual sharing of values with the Committee of Creditors alongside resolution plans. It is equally relevant where a Resolution Professional is handling multiple concurrent CIRPs and needs a consistent internal process for tracking valuation timelines and outputs, or where the Committee of Creditors seeks an independent, non-valuer perspective on the figures placed before it.
6. Key Considerations for Resolution Professionals
Several practical issues tend to recur at this stage of a CIRP. The statutory timeline for appointing valuers is short and runs concurrently with several other early-stage obligations of the Resolution Professional, which makes early planning important. The independence conditions attached to valuer appointment need to be checked carefully, particularly where the corporate debtor has a long-standing auditor or advisory relationship. Confidentiality under Regulation 35 is a continuing obligation, not a one-time formality, and extends to the Resolution Professional, the valuers, and subsequently to Committee members who receive the values. Where the two valuers' estimates diverge meaningfully, the process of engaging a third valuer and arriving at the applicable value should be documented transparently, since this becomes relevant if the valuation is later questioned.
7. Typical Areas of Support
- Tracking and calendarising statutory timelines under Regulation 27 for appointment of Registered Valuers
- Reviewing valuation reports for internal consistency, completeness and clarity of assumptions
- Supporting reconciliation where fair value or liquidation value estimates differ significantly
- Preparing summaries and presentations of valuation outcomes for the Committee of Creditors
- Comparing resolution plan terms against the fair value and liquidation value benchmarks
- Assisting with documentation and record-keeping to support confidentiality and audit requirements
8. Our Professional Approach
A valuation-support engagement of this kind generally begins with an understanding of the corporate debtor's asset base, the CIRP timeline, and the Registered Valuers already engaged or under consideration. From there, the emphasis is on process discipline — clear tracking of statutory deadlines, structured review of valuation deliverables against the requirements of Regulation 35, and objective, well-reasoned analysis that the Resolution Professional can rely on when engaging with the Committee of Creditors. Throughout, the distinction between the statutory valuation function performed by Registered Valuers and the advisory support provided around that function is maintained, and all work is carried out with the confidentiality the Regulations require.
9. Who May Benefit
- Resolution Professionals and Interim Resolution Professionals managing the valuation stage of a CIRP
- Insolvency Professional Entities coordinating valuation processes across multiple assignments
- Committee of Creditors seeking an independent read on valuation outcomes before evaluating resolution plans
- Corporate debtors and their management navigating the CIRP timeline
- Resolution applicants seeking to understand how fair value and liquidation value bear on plan evaluation
10. Conclusion
Fair value and liquidation value determination is one of the more procedurally sensitive stages of a CIRP, sitting at the intersection of the Companies Act, 2013, the Insolvency and Bankruptcy Code, 2016, and the CIRP Regulations. Getting the process right — timelines met, methodology consistent, confidentiality preserved, and divergences properly resolved — supports a resolution outcome that can withstand scrutiny. Vallore Advisory LLP works alongside Resolution Professionals and other stakeholders to bring that discipline to the valuation stage of CIRP, in a manner consistent with the regulatory framework governing the process.