TaxTMI 
TaxTMI 
Guidelines for Conducting Valuation Under the Insolvency and Bankruptcy Code, 2016.
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.... comprehensive, supported by adequate documentation, and prepared through a structured and well-reasoned assessment of the assets of the corporate debtor. Further, the reliability, credibility and adequacy of valuation reports are fundamental to achieving the objective of value maximisation under the Code. 2. Amended sub-regulation (1A) of regulation 35 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, sub-regulation (8) of regulation 35 of the IBBI (Liquidation Process) Regulations, 2016, clause (b) of sub-regulation (1) of regulation 3 of the IBBI (Voluntary Liquidation Process) Regulations, 2017, Sub-regulation (1A) of regulation 39 of the IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021, and sub-regulation (5) of regulation 30 of the IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, provide that a registered valuer shall prepare the valuation report and maintain such documentation as per the format notified by the Board through circular. 3. In view of the above, the Insolvency and Bankruptcy Board of India (IBBI) hereby specifies the Guidelines for Conducting Valuation Under the ....
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....oordinating Valuer. Part - II specifies the asset specific format of the Valuation Report and Part III provides the guidelines for Coordinating Valuer for determination of fair value of the corporate debtor under the Code. The details are provided below: PART - I: GENERAL CONTENT (a) Documentation i. Documentation shall constitute a comprehensive written record of the valuation, and shall include relevant communications with the client, working papers, and supporting materials that substantiate the conclusions reached. ii. The Registered Valuer shall ensure that documentation shall be maintained in a manner that clearly describes the valuation process and is sufficient to substantiate the conclusions reached by him. Such documentation should be sufficient to understand the scope of the valuation, the work performed, and the basis of the conclusions drawn. iii. Documentation shall include, but not be limited to, records of communication with the client; alternative methodologies considered; additional data and inputs evaluated; risks and potential biases identified and addressed; the exercise of professional judgement; and the valuation quality....
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....-12 months, <1 year, etc.). iv. Legal Enforceability and Documentation: Status whether secured or unsecured, disputed or undisputed, availability of enforceable documentation like valid contracts, invoices, acknowledgment of debt, KYC details of the debtors of Corporate Debtor, etc. v. Past Recovery and Servicing Record: Historical recovery experience from similar types of receivables or customers or industry sectors including legal and administrative costs, time of recovery, etc. vi. Macroeconomic and Industry Factors: Sector-specific default trends and economic conditions impacting the recoverability of receivables. vii. Any other parameter as considered relevant during the valuation process. (d) Duties of the Registered Valuers towards the designated Coordinating Valuer The Registered Valuers shall - i. provide full assistance and cooperation to the Coordinating Valuer, including timely sharing of inputs, data, and clarifications required for valuation; ii. comply with applicable provisions of the Code, regulations made thereunder, Companies (Registered Valuers & Valuation) Rules, 2017 and applicable v....
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....engagement/appointment letter for the intent and purpose of the assignment should be elaborated. b) Details of the Registered Valuer & Registration Number [Name of the Registered Valuer (RV)/Registered Valuer Entity (RVE)] - Land & Building Registration Number: The VRIN shall be mentioned in the footer on the left side of each page of the report. c) Details of any other experts involved in the valuation process Provide name, qualifications, and role of any expert, if involved whose input was used in the valuation report. d) Disclosure of valuer interest or conflict, if any The Registered Valuer shall declare personal, financial, or professional interest in the valuation or any conflict of interest with the client or stakeholders, as per the provisions of Companies (Registered Valuers & Valuation) Rules, 2017. e) Identity of Client/Appointing Authority and other intended users Client/Appointing Authority: Name and registration number of the insolvency professional [acting as Interim Resolution Professional (IRP), Resolution Professional (RP), Liquidator or Bankruptcy Trustee as the case may be,] other intended users: [if any, e.g., Creditors] f) I....
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.... • Other relevant source(s) of information as considered necessary. k) Basis(es) and Premise of Value adopted The Registered Valuer shall select the most appropriate 'Basis(es) of Value' and the 'Premise(s) of Value' for the purpose of IBC. The relevant definitions of the adopted Basis of value and Premise of value, must be stated with pertinent discussions in the following format: Basis Adopted Valuation Purpose Basis *The basis of valuations under IBC is to determine the fair value and liquidation value under relevant regulations of IBC. Premise Adopted Asset Type Premise Adopted Remarks/Justification *The premise of valuations shall be as per the provisions of relevant regulations or the applicable provisions of the Valuation Standards notified by the Board in this regard. l) Valuation Standards Followed The Registered Valuer shall explicitly state that the Valuation Standards as notified by the Board have been followed in the valuation assignment. Further, the Registered Valuer shall also specify the relevant standards along with the relevant sections of the standards applied in t....
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....erviews with local agents & verification of property access and marketability; and • Any other details as considered necessary for the purpose of valuation. q) Sustainability and Functional Factors impacting valuation • Environmental: Information about environmental factors considered; • Social: Connectivity, Proximity to social infrastructure, schools, hospitals etc.; • Governance: RERA compliance, municipal approvals, zoning & land use conformity any other regulatory compliance/approval that affect the lawful usage of the asset; • Right to sell/transfer/lease/develop the property; • Age, structural condition, balance economic life of structures/building; • Demand and Supply conditions; • Potential usage/Alternative usage: Residential, Commercial, Leasehold etc.; and • Any other factors affecting the asset's ability to generate net economic outcome. r) Significant or Special Assumptions, and/or Limiting Conditions • Title verification subject to legal opinion, if any; • Assumed soil bearing capacity suita....
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....FOR PLANT & MACHINERY Executive Summary of the Valuation Report Item Details Client / Appointing Agency [Name and registration number of the insolvency professional acting as Interim Resolution Professional (IRP), Resolution Professional (RP), Liquidator or Bankruptcy Trustee as the case may be,] Details of the Corporate Debtor [Name] including business profile, CIN/ LLP No., Legal Entity Identifier (LEI No.) (if available), Address of the registered office and principal office (if any) of Corporate Debtor, Date of incorporation of Corporate Debtor etc. Purpose of Valuation [Add details] Class of Asset Plant & Machinery Subject Asset [Brief Description, e.g., Machinery at XYZ etc.] Scope of Work [Scope Summary] Insolvency commencement date (ICD) / Liquidation commencement date (LCD) [dd/mm/yyyy] Valuation Date [dd/mm/yyyy] Inspection Date [dd/mm/yyyy] Report Date [dd/mm/yyyy] Fair Value INR X crore Liquidation Value INR Y crore Details of the Registered Valuer [Name of the Registered Valuer (RV)/Registered Valuer Entity (RVE)] Registratio....
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.... current use of the asset(s), date of put to use, quantity, units of measurement, and any other relevant information. h) Background and Other relevant information about the Asset Being Valued Ownership history, legal status, encumbrances, usage, approvals, development potential and other relevant information i) Valuation Currency(ies) and Measurement The valuation shall ordinarily be expressed in Indian Rupees (INR). Where, owing to the nature of the assets, business operations, transactions, or market practices, any value is expressed in a currency other than INR, the Registered Valuer shall provide reasons for the use of such currency. In such cases, the valuation report shall also disclose the applicable exchange rate used for conversion into INR, the date as of which such exchange rate has been considered, and the source from which the exchange rate has been obtained. The units for measurement of Plant and Machinery used in the report should be mentioned. j) Sources of Information • Financials of the Corporate Debtor (P&L, Cash flow, Balance Sheet to understand the utilization of P&M assets); • Fixed Asset Register; â€....
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....such method-specific data and disclose the same in the valuation report. In addition to this, the Registered Valuer shall also provide brief details about the meetings held with members of the Committee of Creditors to explain the methodology being adopted to arrive at valuation as per the requirement of Regulation 35 (1)(b) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. n) Relevant discounts and premiums The Registered Valuer shall provide a detailed description of all relevant discounts and premiums considered during the valuation process along with the rationale for each adjustment. o) Sources of Data and Inputs Used along with rationale/justification. • Market quotes; • Manufacturer/supplier data; • Online portals; • Fixed Asset Register; • Local trends, macro-economic & micro-economic indicators; • Legal, Social, Physical and technological factors; and • Any other source, to be specified. p) Description of Inspections and/or Investigations Undertaken • Date of visit [dd/mm/yyyy]; • Machines verified agai....
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....updated from time to time. u) Summary of Conclusions The valuation report in this section would conclude the identified rights, the approach and method adopted, data availability and provide the final calculation workings (to be supported with Annexures) v) Annexures • Appointment letter • Engagement terms • Site photographs • Machine specs & registers • Title/supporting documents • Market data extracts • Calculation sheets • Minutes of the meetings/discussions held with Committee of Creditors • Copy of engagement letter of expert, if involved whose input was used in the valuation report. Note: (1) This is a basic format of valuation report. Additional information items may be included for specific asset classes as required. (2) It may be noted that where any parameter is not applicable or data is unavailable, the Registered Valuer shall disclose and record appropriate justification for the same in the Valuation Report. (3) The VRIN shall be mentioned in the footer on the left side of each page of the report VALUATION REPORT FOR....
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....re personal, financial, or professional interest in the valuation or any conflict of interest with the client or stakeholders, as per the Companies (Registered Valuers & Valuation) Rules, 2017. e) Identity of Client/Appointing Authority and Other Intended Users Client/Appointing Authority: Name and registration number of the insolvency professional [acting as Interim Resolution Professional (IRP), Resolution Professional (RP), Liquidator or Bankruptcy Trustee as the case may be,] other intended users: [if any, e.g., Creditors] f) Intended Use This report is intended to determine valuation as per the provisions of the Insolvency and Bankruptcy Code, 2016 and rules and regulations made thereunder. g) Details of Assets and/or Liabilities being valued Details may include Classification and Type of assets including intangible assets, quantity, ownership, issuer details, rights, marketability, legal agreements, financial metrics, and regulatory compliance. h) Background and Other Relevant Information about the Asset Being Valued • Type of assets/Instruments; • Issuer: Company or entity details; • Quantity and Characteri....
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....The relevant definitions of the adopted Basis of value, Premise of value, must be stated with pertinent discussions in the following format: Basis Adopted Valuation Purpose Basis *The basis of valuations under IBC is to determine the fair value and liquidation value as per relevant regulations. Premise Adopted Asset Type Premise Adopted Remarks/Justification *The premise of valuations shall be as per the provisions of relevant regulations or the applicable provisions of the Valuation Standards notified by the Board in this regard. l) Valuation Standards Followed The Registered Valuer shall explicitly state that the Valuation Standards as notified by the Board have been followed in the valuation assignment. Further, the Registered Valuer shall also specify the relevant standards along with the relevant sections of the standards applied in the preparation of the valuation report. m) Valuation Approaches and Methods or Valuation Model(s) Applied Details of the approaches considered: • Market Approach • Income Approach • Cost Approach The valuation repo....
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....ion; • Business risks, future outlook, strategy, and future plans; • For intangible assets, this includes legal rights, licensing agreements, sublicense agreements, non-disclosure agreements, development rights, software, patents commercialization rights, etc.; and • Any other relevant factors considered necessary by the Registered Valuer. r) Significant or Special Assumptions, and/or Limiting Conditions • Reliance on representations; • Material assumptions (e.g., no contingent liabilities unless disclosed); • Pending litigation, if any, and its impact on valuation etc. s) Value and Rationale for Valuation • Fair Value: INR X crore • Liquidation Value: INR Y crore The Registered Valuer shall specify the rationale for arriving at the above values on the basis of analysis of comparable transactions, market trends, property conditions, regulatory constraints and known disputes, etc. in accordance with the applicable provisions of the Valuation Standards notified by the Board in this regard. • Book Value: INR Z crore (Asset wise) • Replacement....
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.... Valuer is to ensure that the Fair Value (FV) of the Corporate Debtor, as envisaged under IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and IBBI (Pre-Packaged Insolvency Resolution Process) Regulations, 2021 (PPIRP Regulations), is captured in a holistic manner, thereby reflecting its true commercial worth, value attributable to operational and business synergies, and overall economic value. 1.4 The Coordinating Valuer shall seek to achieve the following objectives: a) improve consistency and reliability in valuation outcomes under the Code; b) ensure integration and coherence of valuations across three asset classes; c) capture holistic value, including synergy, tangible and intangible assets; d) facilitate the Committee of Creditors to make informed decisions based on a comprehensive valuation of the Corporate Debtor;; and e) enhance transparency and confidence in the valuation process. 1.5 These guidelines shall be read in conjunction with Part I (General Content) and Part II (Asset Specific Format of Valuation Reports) of the Valuation Guidelines. 1.6 These guidelines s....
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....ions. 4.2 The asset-wise valuation reports submitted by the Registered Valuers in a set, shall be provided to the Coordinating Valuer for determination of the fair value of the Corporate Debtor. 4.3 The Coordinating Valuer shall act as the overall integrator and explore inherent synergies to provide Fair Value of the Corporate Debtor as mandated under the Code and Regulations made thereunder. 4.4 The Coordinating Valuer shall, inter alia, perform the following functions: a) consider the valuation reports prepared by asset-class Registered Valuers; b) analyse valuation methodologies and assumptions adopted; c) integrate asset-class level valuations to derive holistic value of Corporate Debtor along-with their underlying synergies; and d) estimate the Fair Value of the Corporate Debtor as a whole. 5. Scope of Work The scope of work of the Coordinating Valuer shall include, but shall not be limited to, the following: 5.1 Report of Asset Class Valuations The Coordinating Valuer shall consider the valuation reports prepared by Registered Valuers of their set for all asset classes of the Corporate Debtor such as: a) ....
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....1;𝑅𝑉)+𝑆 Where: 𝐹𝑉𝐶𝐷 = Fair Value of the Corporate Debtor 𝑉𝑅𝑉 = Values of individual asset classes determined by Registered Valuers 𝑆= Synergistic value adjustment reflecting the additional value arising from the integrated operation and interaction of the tangible and intangible assets and business activities of the Corporate Debtor, including operational efficiencies, business synergies, market positioning, and expected future earning potential. 6. Documentation 6.1 The Coordinating Valuer shall maintain documentation that clearly records the valuation process undertaken, in the manner specified in Part - I (a) of these guidelines. 7. Coordinating Valuation Report 7.1 The Coordinating Valuer shall prepare a Coordinating Valuation Report presenting the determination of the Fair Value of the Corporate Debtor as per the manner specified in these guidelines. 7.2 The report shall contain the minimum contents as specified in Part-I(b) of these Guidelines. 7.3 The Coordinating Valuation Report shall, inter alia, include the following: ....