IBBI Prescribes International Valuation Standards for All Processes Under the Insolvency and Bankruptcy Code, 2016
The Insolvency and Bankruptcy Board of India has formally mandated the use of International Valuation Standards (IVS) for every valuation carried out under the Insolvency and Bankruptcy Code, 2016. This directive has been issued through Circular No. IBBI/RV/93/2026 dated 1st April, 2026, and takes effect immediately from the date of issue.
The circular represents a significant policy shift towards globally harmonized valuation practices in Indian insolvency proceedings, covering corporate as well as certain individual insolvency situations. By aligning with the standards issued by the International Valuation Standards Council (IVSC), the IBBI aims to strengthen the reliability and comparability of valuation outcomes across all processes governed by the Code.
Objective of the Circular
Maximisation of value as a core IBC objective
The Insolvency and Bankruptcy Code, 2016 identifies maximisation of value of assets of the corporate debtor as a central purpose of the insolvency framework. This must be achieved within strict timelines to preserve value and facilitate efficient resolution.
In that context, valuation of the assets and business of the corporate debtor is not a mere procedural formality; it is a foundational tool for:
- Assessing feasibility and commercial viability of resolution plans
- Enabling the committee of creditors to make informed commercial decisions
- Assisting resolution applicants to structure competitive and realistic plans
- Supporting adjudicating authorities in evaluating whether plans comply with statutory requirements and protect stakeholder interests
A credible valuation framework is therefore indispensable for fair outcomes under the Code.
Need for transparency and consistency
The IBBI’s circular underscores that valuation used in insolvency and bankruptcy processes must adhere to standards that ensure:
- Transparency – clear methodologies and assumptions that stakeholders can understand and scrutinize
- Objectivity – valuations based on professional judgment and accepted principles rather than subjective or arbitrary approaches
- Credibility – outputs that can be relied upon by creditors, resolution applicants, adjudicating authorities, and other stakeholders, including potential investors
By prescribing a uniform valuation framework through IVS, the IBBI seeks to reduce variation in approaches, avoid disputes on methodology, and enhance confidence in the valuation figures that form the basis of key insolvency decisions.
Scope of Applicability of the Circular
Processes covered under the Code
The circular is not confined to a single type of process; instead, it has a comprehensive reach across multiple procedures under the Insolvency and Bankruptcy Code, 2016.