IBBI Proposes Standardised Valuation Report Format for Insolvency Cases

The Insolvency and Bankruptcy Board of India (IBBI) has proposed a uniform format for valuation reports in insolvency cases to make assessments credible and reduce disputes. The draft, released on November 19, seeks to improve disclosure standards and ensure consistency in how professionals present valuations of distressed assets. Public feedback on the proposal will be accepted until December 10.

Key Features of the Proposed Format

The new format mandates detailed disclosures on valuation risks, potential conflicts of interest and the basis of professional judgement used in determining asset values. It also requires supporting documentation and information relevant to recoverability, such as cost structures and economic trends. These measures aim to strengthen due diligence and make negotiations more realistic for better resolution outcomes.

Context and Rationale Behind the Move

Valuation reports have often become contentious in bankruptcy proceedings, leading to prolonged litigation and delays in resolution. A standardised format is expected to simplify assessments for creditors and investors, who rely on these valuations to decide whether to rescue or liquidate distressed companies. The move aligns with IBBI’s broader efforts to improve transparency and efficiency in the insolvency process.

Impact on Stakeholders

By introducing uniformity and stricter disclosure norms, the proposed framework is likely to enhance confidence among lenders, investors and resolution professionals. It will also help reduce ambiguity in valuation practices, thereby lowering the risk of disputes. The initiative is seen as a step toward strengthening India’s insolvency ecosystem and improving recovery outcomes for creditors.

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Conclusion

IBBI’s proposal to standardise valuation reports marks a significant reform in the insolvency process. Enhanced disclosure requirements and uniform reporting standards are expected to improve transparency and reduce litigation risks. Stakeholders now have an opportunity to provide feedback before the framework is finalised. The move underscores IBBI’s commitment to making India’s debt resolution system more robust and credible.

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