Enterprise Value Enters the Picture: IBBI’s Valuation Reforms

The amendments, which came into force on February 25, 2026, introduce structural changes to the valuation framework under the Code. In particular, the changes: (i) revise the definition of fair value, (ii) introduce a coordinating valuer framework for enterprise-level valuation, (iii) provide for uniform valuation standards, and (iv) standardise the format of valuation reports and supporting documentation.

Together, these reforms seek to improve the consistency, transparency, and credibility of valuations conducted under the Code.

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A. Fair value revised to reflect enterprise value

One of the key changes introduced by the amendments is the substitution of the definition of “fair value”.

Under the earlier framework, fair value was defined as the estimated realisable value of the assets of the corporate debtor, if exchanged between a willing buyer and a willing seller in an arm’s length transaction on the insolvency commencement date. This formulation effectively centred the valuation exercise on the value of individual assets.

The revised definition broadens this approach. Fair value is now defined as the estimated realisable value of the corporate debtor or its assets, as the case may be, in an arm’s length transaction after proper marketing. Importantly, the accompanying explanation clarifies that the estimated realisable value of the corporate debtor must be computed by taking into account the total estimated realisable value of all its assets, including both tangible and intangible assets, together with their underlying synergies.

B. New framework for determining fair value and liquidation value

The amendments also substantially revise the framework for determining fair value and liquidation value.

Under the revised approach, the resolution professional is required to appoint two sets of registered valuers. Each set comprises one valuer for each asset class of the corporate debtor, and one valuer within the set is designated as the coordinating valuer in consultation with the committee of creditors.

Each registered valuer first determines the fair value of the assets within their respective asset class and the liquidation value. The coordinating valuer then computes the fair value of the corporate debtor after considering the fair value of the assets as determined by the valuers within that set, along with their underlying synergies.

Where the estimates of fair value or liquidation value differ significantly (i.e., by 25 per cent or more), or where the committee of creditors recommends, the resolution professional may appoint a third set of valuers.

The final values are determined as follows:

• the fair value is the average of the two closest estimates submitted by the coordinating valuers; and
• the liquidation value is the average of the two closest estimates submitted by the registered valuers in each asset class.

Illustrative example:

Under the revised framework, the resolution professional appoints two sets of valuers, each comprising one valuer per asset class. One valuer in each set acts as the coordinating valuer.

The coordinating valuer in each set then determines the fair value of the corporate debtor after considering the individual asset valuations and the synergies between such assets.

The final values of the corporate debtor are determined as the average of the estimates submitted by the two coordinating valuers.

C. Uniform valuation standards across insolvency processes

The amendments also harmonise the valuation standards applicable across insolvency stages. Earlier, valuers followed internationally accepted valuation standards during the corporate insolvency resolution process, while relying on the Companies (Registered Valuers and Valuation) Rules, 2017, during the liquidation process, resulting in different methodologies.

To address this, the amendments empower the Board to notify the valuation standards through circulars.

D. Standardisation of valuation reports

Registered valuers are now required to prepare valuation reports and maintain supporting documentation in accordance with formats and requirements notified by IBBI through circulars.

Concluding thoughts

The amendments mark an important evolution in the valuation framework under the IBC by emphasising enterprise-level assessment and introducing a coordinating valuer structure to integrate asset-level valuations and potential synergies. At the same time, certain operational aspects—including the valuation standards and the format of valuation reports and supporting documentation—are yet to be specified through IBBI circulars, and further clarity on the practical implementation of the revised framework is therefore awaited.