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Informist, Friday, Nov. 14, 2025

 

NEW DELHI – The Insolvency and Bankruptcy Board of India Friday suggested explicitly including intangible assets such as brands, intellectual property, customer relationships, knowhow, and goodwill in the fair value of a company going through the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. Increasingly, these assets are central to enterprise value across many sectors and will better reflect the value of a corporate debtor, the board said in a discussion paper.

 

Currently, fair value means the estimated realisable value of assets of a corporate debtor if they were to be exchanged on the insolvency commencement date between a willing buyer and a willing seller in an arm's length transaction after proper marketing and where the parties acted knowledgeably, prudently, and without compulsion.

 

As per the discussion paper, registered valuers often provide asset-class-specific estimates, which means a comprehensive, unified valuation of the corporate debtor as a whole is often missing. This can lead to under-assessment of intangible assets like brand value, intellectual property, customer relationships, and goodwill, as well as the overall value of the business as a going concern.

 

This fragmented approach could result in under-assessment of the debtor's true commercial worth, distort evaluation of resolution plans, reduce creditor recoveries, and discourage credible resolution applicants, thereby diluting the bankruptcy code's underlying objective of value maximisation, the board said. This could cause a wide gap between the resolution value of the debtor vis-a-vis its fair or liquidation value, raising concern amongst stakeholders, it said. This also makes it difficult to benchmark resolution plans against what a rational buyer would objectively assess and pay for the business as a whole, it added.

 

Friday, the board released the discussion paper on strengthening the valuation process of companies going through insolvency proceedings. It has invited comments from stakeholders by Dec. 7 on the suggestions for changes in the insolvency law.

 

In the paper, the board has also proposed to standardise the format of corporate valuation reports and the documentation needed to undertake valuation assignments under the 2016 code. It has suggested harmonising the corporate insolvency resolution process and liquidation regulations to follow a uniform standard for such valuation. Further, it has suggested appointing a single registered valuer for small-sized corporate debtors and appointing a coordinator valuer to estimate the fair value of the corporate debtor.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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