Valuation Under IBC: Registered Valuers, Fair and Liquidation Value (2026)

Every corporate insolvency resolution process turns on one question the Committee of Creditors cannot avoid: what is this company actually worth? Valuation under IBC supplies that answer through two numbers — fair value and liquidation value — computed by independent registered valuers and shared with the CoC before any resolution plan is voted on. For CAIIB and JAIIB candidates, this is a favourite examiner topic because it sits at the intersection of the Insolvency and Bankruptcy Code, the Companies Act, and everyday credit-recovery decisions bankers make on stressed accounts. Get the mechanics wrong in the exam hall and you lose easy marks on a topic that is, in truth, fairly mechanical once you know the sequence.

This article walks through who a registered valuer is, how fair value differs from liquidation value, when these figures are computed during the process, and why the resolution professional treats both numbers as confidential until the CoC needs them. We also place valuation in context against the broader credit recovery framework banks rely on when a borrower slips into stress.

📋 Who Is a Registered Valuer Under IBC

A registered valuer is a professional certified under the Companies (Registered Valuers and Valuation) Rules, 2017, framed under Section 247 of the Companies Act, 2013, and regulated by the Insolvency and Bankruptcy Board of India (IBBI) as the designated authority. Valuers register in one of three asset classes: Land and Building, Plant and Machinery, or Securities or Financial Assets. A corporate debtor with immovable property, factory equipment, and investments typically needs valuers across more than one class, which is why resolution professionals often engage multiple registered valuers for a single CIRP.

Under the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the resolution professional appoints two registered valuers to independently determine the fair value and the liquidation value of the corporate debtor. Two valuers, not one, because the Code wants a cross-check built into the process from day one — a single valuer's estimate could be biased, mistaken, or challenged later by an aggrieved creditor or applicant. This appointment happens early in the process, soon after the resolution professional takes charge, and is one of the first substantive steps you will find discussed alongside the roles and duties of IRP and RP.

Valuers owe their duty to the process, not to any single stakeholder. They must be independent of the corporate debtor, its promoters, and its creditors, and they certify their reports under the professional and ethical standards laid down by the Registered Valuers Organisations recognised by IBBI. Where the two valuers' figures diverge materially, the resolution professional and the CoC deal with the discrepancy as part of their oversight function rather than simply averaging the numbers blindly.

💰 Fair Value vs Liquidation Value

The two figures a registered valuer must produce answer different questions, and mixing them up is the single most common exam trap on this topic.

Fair value is the estimated realisable value of the corporate debtor's assets on the insolvency commencement date, as if they were sold on an arm's length basis between a willing buyer and a willing seller in an open market — essentially, what the business or its assets would fetch as a going concern or under normal transaction conditions.

Liquidation value is the estimated realisable value of the corporate debtor's assets on the insolvency commencement date, as if the company were being wound up and its assets sold off under liquidation, typically in a forced or distressed sale scenario. Liquidation value is almost always lower than fair value because a forced sale rarely captures full going-concern worth.

Both figures are computed as on the insolvency commencement date, which is why the concept links directly to the timeline established once CIRP is triggered — a topic covered in depth in our guide on the insolvency commencement date under IBC.

💡 Exam Tip: Remember the anchor — fair value assumes an orderly, arm's length sale; liquidation value assumes a forced, time-pressured sale. Liquidation value sets the floor for what any resolution plan must beat.

Why does the Code demand both? The CoC uses fair value and liquidation value as reference points while evaluating any resolution plan under Section 30. A resolution plan that offers financial creditors less than the liquidation value is unlikely to clear the commercial wisdom test, because creditors could, in theory, recover at least that much by pushing the company straight into liquidation instead. The gap between fair value and liquidation value effectively measures how much value survives if the business stays alive as a going concern versus being broken up and sold piecemeal.

⚖️ Confidentiality and the Role of the CoC

The resolution professional does not publish the fair value and liquidation value figures to the world, or even to resolution applicants, before plans are submitted. Both numbers are treated as confidential and shared only with the Committee of Creditors, and members of the CoC are themselves bound to keep the figures confidential. The logic is straightforward: if a prospective resolution applicant knew the liquidation value in advance, they could structure a plan to just barely clear that floor rather than offer the best value the assets can genuinely support.

Once resolution plans are received, the resolution professional places them before the CoC alongside the valuation figures so members can judge whether the plan's offer to each class of creditors is reasonable relative to what liquidation would have delivered. This comparison feeds directly into the CoC's commercial wisdom, which the Supreme Court has repeatedly held is largely non-justiciable before the NCLT and NCLAT.

If the process fails to yield an approved resolution plan within the mandated timeline and the corporate debtor moves to liquidation, the liquidation value computed earlier becomes the reference point the liquidator works from, tying valuation directly into what happens next under the liquidation and voluntary liquidation chapter. For a fuller walkthrough of what follows once CIRP fails, see our companion article on the liquidation process under IBC.

⚠️ Common Mistake: Candidates often assume the resolution professional personally decides the valuation. The RP only appoints and coordinates the valuers — the figures themselves are independent professional estimates, not the RP's own judgment call.

🏦 Why Valuation Matters for Bankers

For a banker sitting on the Committee of Creditors, valuation under IBC is not academic — it directly shapes recovery strategy. If the fair value comfortably exceeds outstanding dues, the CoC has room to negotiate a resolution plan that keeps the business running and preserves employment, brand value, and future banking relationships. If fair value and liquidation value sit close together, the account is genuinely distressed, and the bank's provisioning and recovery expectations should reflect that reality rather than optimism.

This is also where valuation under IBC connects back to the wider architecture of debt recovery tools available to Indian banks — the DRT and SARFAESI routes, negotiated settlements, and now the IBC's collective insolvency mechanism, all covered together in the credit recovery laws for banks chapter. Valuation figures also matter once a case reaches the adjudicating authority, since disputes over valuation methodology or valuer independence can be raised before the NCLT and NCLAT under IBC if a stakeholder believes the process was compromised.

Banks that sit on multiple CoCs across sectors also start to notice patterns: asset-heavy manufacturing debtors tend to show a wide fair-value-to-liquidation-value gap because plant and machinery lose significant resale value outside an operating unit, while service-oriented or asset-light debtors often show the two figures converging, since there is little physical asset base to liquidate. Recognising this pattern helps a banker gauge, even before the numbers land on the table, whether a resolution or a straight liquidation is the more realistic outcome.

🧠 Practice MCQs: Valuation Under IBC

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❓ Frequently Asked Questions

📌 Key Takeaways for Your Exam

Valuation under IBC is a compact but high-yield topic: know that two registered valuers are appointed, know the definitional difference between fair value and liquidation value, and know that both figures are computed as on the insolvency commencement date and stay confidential until the Committee of Creditors needs them to evaluate resolution plans. This same logic underpins the recovery calculus bankers apply across every distressed account, whether the eventual route is negotiated settlement or the formal insolvency process — a theme that also echoes into related CAIIB areas such as the contract of agency for bankers, where fiduciary and valuation-adjacent duties surface in a different context.

📌 Remember: Fair value = going-concern, arm's length. Liquidation value = forced sale. Both are dated to the insolvency commencement date and stay confidential with the CoC.

For the regulatory text on valuer eligibility, registration, and conduct, refer to the Insolvency and Bankruptcy Board of India's official resources at ibbi.gov.in. To revise the surrounding structure of the Code before your exam, browse the structure of the IBC chapter, or explore every article tagged under the Insolvency and Bankruptcy Code 2016 hub for the complete syllabus coverage. Then lock in the concept with a timed chapter test — start your free IBC mock test now →