A Critical Look at IBBI’s Valuation Reform Proposals Against Global Best Practices

The Insolvency and Bankruptcy Board of India (IBBI) released a detailed Discussion Paper dated 14-11-2025 proposing significant reforms to valuation under the Insolvency and Bankruptcy Code, 2016 (IBC).

The central question remains: Will India’s 26.5 per cent recovery rate improve with the introduction of more complex valuation frameworks?

The Insolvency and Bankruptcy Board of India (IBBI) released a detailed Discussion Paper dated 14-11-2025 proposing significant reforms to valuation under the Insolvency and Bankruptcy Code, 2016 (IBC). While the objective, improving valuation discipline and uniformity, is commendable, comparative global evidence demonstrates that adding new structural layers rarely improves recovery outcomes.

According to the World Bank Doing Business, 2020, resolving insolvency study, jurisdictions with the highest recovery rates adopt valuation systems that are simple, rapid, and market-validated.¹ India’s performance — 26.5 cents on the dollar over 1.6 years — is among the weakest globally.

Overview of the five IBBI proposals

The Discussion Paper seeks to address deficiencies such as inconsistency, non-uniformity, and limited transparency in IBC valuations [Paras 1-6 of IBBI Discussion Paper (14-11-2025)]², and proposes amendments aimed at standardisation, harmonisation, and holistic value determination (Paras 10-12)³.

Standardised valuation reports (Proposal 1)

The IBBI wants to make it such that all valuation reports and supporting documentation have to use the same templates (Paras 5-6)⁴. This would get rid of differences in structure, content, and assumptions. This should make it easier to compare and cut down on arguments. Formats based on circles also allow for changes to be made in real time.

The proposal, on the other hand, does not provide a transition framework (Para 36)⁵ and does not allow enough room for asset-class customisation, which could lead to assessments that are too formulaic.

Harmonised standards for fair value (Proposal 2)

Corporate Insolvency Resolution Process (CIRP) valuations must currently follow internationally accepted valuation standards⁶, while liquidation valuations follow the Companies (Registered Valuers and Valuation) Rules, 2017. This duality results in divergent methodologies⁷.

The proposal seeks a single harmonised valuation standard applicable across CIRP, Pre-Packaged Insolvency Resolution Process (PPIRP), liquidation, and other processes⁸.

This might make things more consistent, but it also raises questions about whether it will conflict with the Ministry of Corporate Affairs’ (MCA’s) legal duty to make rules and what the order of standards should be. This worry can be overcome only if IBBI and MCA coordinate to produce a cooperatively aligned valuation methodology or a mutual-recognition protocol to avoid regulatory conflict.

Expanded definition of fair value (Proposal 3)

The current definition puts emphasis on asset-wise realisable value⁹. The proposal in the Discussion Paper reframes “fair value” as a holistic enterprise-level valuation, covering intangibles, synergies, and goodwill¹⁰.

However, the Discussion Paper does not specify methodological limitations for evaluating intangibles, synergies, or going-concern premiums. Without this kind of help, valuers might assume things differently, use different methods, and end up in more court cases.

Single valuer for micro, small, and medium enterprises (MSMEs) and smaller companies (Proposal 4)

Regulation 27, CIRP Regulations says that two registered valuers must be hired. The proposal would replace this with one registered valuer for MSMEs or businesses with sales of less than Rs 500 crores¹¹. The goal is to lower costs and speed up timelines¹².

The Committee of Creditors (CoC) can still choose two valuers, but they must write down why they did so¹³.

The proposal says it will cost less and take less time. But, companies with a lot of regulatory risk, specialised assets like equipment and machinery in specialty industries, or complex Intellectual Property (IP)-driven firms need domain-specific valuation expertise. In MSME situations that are still pretty technical, one valuer might not have the skills to value assets correctly, which could lead to undervaluing or overvaluing them.

Coordinator-valuer framework (Proposal 5)

A new tier is introduced: two sets of valuers are appointed, and one valuer in each set acts as the coordinator valuer¹⁴.

The coordinator consolidates individual asset-class valuations into the aggregate fair value (AFV)¹⁵.

The final fair value is then computed as the average of the two AFVs¹⁶.

This is intended to capture synergies often missed by fragmented asset-class assessments¹⁷.

But India already has a lot of regulators in the valuation space: the MCA, Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI)/ Foreign Exchange Management Act (FEMA), Central Board of Direct Taxes (CBDT), and IBBI. Proposal 5 does not fix overlaps; it adds another layer of administration and makes things much more fragmented. There is no global example of it. It also makes things more complicated, adds two processes for consolidating and averaging, and could make disagreements worse instead of better.

Global evidence: What actually works?¹⁸

Country	Recovery rate (cents/$)	Time (years)	System characteristics
Japan	92.5	0.6	Single expert valuation; court-supervised market testing
Norway	93.2	0.9	Market-value basis; efficient sale mechanisms
United Kingdom	85.4	1.0	Systematic Investment Plan (SIP)-based professional judgment; pre-pack sales
Singapore	88.7	0.8	Independent experts; rapid court scrutiny
United States	81.0	1.0	Market-tested 363 sale processes
India	26.5	1.6	Dual valuers; fragmented methodologies

Global leaders avoid multi-tiered valuation frameworks; they prioritise speed, clarity and market validation.

The global lesson: Why India must avoid added complexity

India’s proposed multi-layered valuation system goes against the very things that show India is doing poorly. The World Bank index mainly looks at recovery value and time to resolve insolvency.¹⁹ Adding more steps to the process makes these two criteria worse. Introducing new requirements to appoint a coordinating valuer, adopt averaging methods, and use various valuation sets can lead to a greater number of reports and, consequently, more points of challenge or procedural frictions. None of the best-performing jurisdictions use these kinds of systems; instead, they always rely on single-valuer accountability and quick market testing. Proposal 5 risks making both settlement durations and value realisation worse by institutionalising procedural bloat. This goes against the stated goal of increasing valuation under the IBC.

Recommendations based on global evidence

Time and again, empirical research from around the world shows that places with high recovery rates use clear, consistent, and market-oriented valuation methods. Standardised valuation report formats should be used to reduce disputes and ensure everyone is on the same page. This proposal can bring India in line with worldwide standards and makes things easier for the CoC. Focus needs to be on use of a single-valued model with strict deadlines, instead of multi-tiered arrangements. This is because having one expert-in-charge stops averaging errors and makes the process easier. Also, since MCA, SEBI, RBI/FEMA, CBDT, and IBBI all have some power over the same things, there needs to be a permanent inter-regulatory valuation committee to make sure that methods are consistent, that each agency knows about the others, and that there is no duplication or conflict. Lastly, mandatory market validation for high-value assets — through competitive auctions, anchor bids, or Swiss-challenge mechanisms — would bring valuations in line with how the market really works, cut down on disputes, speed up the CIRP process, and boost recoveries in line with international best practices.

Conclusion

IBBI’s desire to improve valuation governance is commendable. Proposal 1 for standardisation and Proposal 2 for harmonisation are in line with global frameworks. But adding complicated things like the coordinator-valuer system could drag down a process that is already behind schedule. The best places to do business around the world depend on speed, market validation, and single-valuer responsibility. Instead of adding more layers to its structure, India should focus on these concepts. Stakeholders must push for simplification, not complication, as public consultation ends on 7-12-2025.