insolvency-and-bankruptcy

At VSJC, we specialize in delivering precise and compliant valuation services crucial for insolvency and bankruptcy proceedings. Our expertise covers various legal and regulatory frameworks, ensuring all valuations meet stringent standards.

Under the Companies Act 2013, we conduct valuations for filing compromises or arrangements amongst creditors and shareholders and for asset valuations during the winding-up process.

The Insolvency & Bankruptcy Code (IBC) 2016 mandates rigorous valuation requirements for the Corporate Insolvency Resolution Process (CIRP) and liquidation processes. Our team performs valuations by registered valuers appointed by the Resolution Professional, ensuring accurate asset assessments. We also provide third-party valuations to resolve significant variances when initial valuations are disputed. During liquidation, we reassess asset values to reflect current market conditions, supporting fair asset disposals.

We facilitate fast-track insolvency resolutions, where we ascertain the fair value and liquidation value of corporate debtors' assets. We adhere to Indian Accounting Standards (Ind AS), providing valuations for non-current assets held for disposal, supporting accurate financial reporting for discontinued operations.

Insolvency and Bankruptcy

Section 230 of the Companies Act 2013 outlines the procedures for compromises, arrangements, and amalgamations between a company and its creditors or shareholders. Accurate valuation is a critical component of this process, ensuring fairness and transparency in the proposed arrangements.

Key Aspects of Valuation under Section 230:

  • Purpose of Valuation: Valuations are required to determine the fair value of shares, assets, and liabilities involved in the compromise or arrangement. This is essential for gaining the confidence of creditors and shareholders, and for obtaining approval from regulatory authorities.
  • Independent Valuation: An independent valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker, must conduct the valuation. This ensures objectivity and reliability in the valuation process.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report outlining the methodology, assumptions, and basis of the valuation. The report should provide a clear and thorough analysis of the value of the assets, liabilities, and shares involved in the arrangement.
  • Regulatory Compliance: The valuation report is a critical document that must be submitted to the National Company Law Tribunal (NCLT) along with the scheme of compromise or arrangement. The NCLT uses this report to assess the fairness of the proposed scheme.
  • Stakeholder Approval: The valuation forms the basis for discussions and negotiations with creditors and shareholders. Accurate and transparent valuation is crucial for obtaining their approval and ensuring the successful implementation of the compromise or arrangement.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 230 of the Companies Act 2013, ensuring that all transactions are conducted with accuracy and transparency.

Section 281 of the Companies Act 2013 deals with the valuation of assets in the event of winding up a company. This section outlines the procedures to ensure that all assets are accurately valued, thereby facilitating fair and transparent distribution among stakeholders.

Key Aspects of Valuation under Section 281:

  • Purpose of Valuation: Valuations are required to determine the fair market value of the company’s assets at the time of winding up. This is essential for the equitable distribution of assets to creditors and shareholders.
  • Independent Valuation: An independent valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker, must conduct the valuation. This ensures objectivity and credibility in the valuation process.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report outlining the methodology, assumptions, and basis of the valuation. The report should provide a clear and thorough analysis of the value of all assets, including tangible and intangible assets.
  • Regulatory Compliance: The valuation report must comply with the regulatory requirements set forth in the Companies Act 2013. This includes adherence to prescribed valuation standards and guidelines.
  • Transparency and Fairness: Accurate valuation is crucial for ensuring that the winding-up process is transparent and fair. It helps in settling the claims of creditors and distributing any remaining assets among shareholders equitably.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 281 of the Companies Act 2013, ensuring that all asset valuations are conducted with accuracy and transparency.

IndAS 105 / IFRS 5 / ASC 360, 205 – Non-current Assets Held for Sale and Discontinued Operations, provides guidelines for the classification, measurement, and presentation of non-current assets and disposal groups when they are intended to be sold. Accurate valuation is essential to ensure these assets are reported at their fair value, providing transparency and reliability in financial statements.

Key Aspects of Valuation under IndAS 105 / IFRS 5 / ASC 360, 205:

  • Classification as Held for Sale: Non-current assets or disposal groups must be classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. The sale should be highly probable, and the asset must be available for immediate sale in its present condition.
  • Measurement Requirements: Upon classification as held for sale, non-current assets and disposal groups must be measured at the lower of their carrying amount and fair value less costs to sell. This ensures that the assets are not overstated in the financial statements.
  • Fair Value Determination: The fair value of non-current assets held for sale is determined based on market-based evidence, using valuation techniques such as:
    • Market Approach: Using prices and other relevant information from market transactions involving identical or comparable assets.
    • Income Approach: Discounting future cash flows that the asset is expected to generate, using an appropriate discount rate.
    • Cost Approach: Estimating the amount that would be required to replace the service capacity of the asset (current replacement cost).
  • Impairment Considerations: If the fair value less costs to sell is lower than the carrying amount, an impairment loss must be recognized. This loss is recorded in the profit or loss account, ensuring that the asset is not overstated.
  • Disclosures: Ind AS 105 requires extensive disclosures about non-current assets held for sale, including a description of the assets, the facts and circumstances of the sale, and the effects on the financial statements.

At VSJC, we specialize in providing expert valuation services for non-current assets held for sale and discontinued operations, ensuring that your financial statements reflect the true value of your assets with accuracy and transparency.

Regulation 26, read with Regulation 34 of the IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017, outlines the valuation requirements for the fast track insolvency resolution process. Accurate valuation is crucial in this accelerated process to ensure transparency and fairness, aiding creditors and stakeholders in making informed decisions swiftly.

Key Aspects of Valuation under Regulation 26 and Regulation 34:

  • Appointment of Registered Valuers: The Resolution Professional (RP) is required to appoint two registered valuers within seven days of the insolvency commencement date. These valuers must be registered with the Insolvency and Bankruptcy Board of India (IBBI).
  • Valuation Objectives: The valuers are tasked with determining the fair value and liquidation value of the assets of the corporate debtor. Fair value is the estimated price at which the assets would be exchanged between knowledgeable, willing parties in an arm’s length transaction. Liquidation value is the estimated amount that the debtor’s assets would realize if sold in a forced or orderly liquidation.
  • Methodology and Approach: The valuers must use recognized and accepted valuation methods, including:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: Each valuer must prepare a comprehensive report detailing the methods and assumptions used in the valuation. The report should clearly state both the fair value and the liquidation value of the assets.
  • Use of Valuation Reports: The RP uses these valuation reports to inform stakeholders and guide the resolution process. These valuations help determine the reserve prices for the sale of assets and support the transparent distribution of proceeds.
  • Third Valuer: If there is a significant difference between the two initial valuations, the RP may appoint a third valuer. The average of the two closest estimates is considered for decision-making.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 26 read with Regulation 34 of the IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017, ensuring that all asset valuations are conducted with accuracy and transparency.

Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, provides guidelines for the valuation of assets during the Corporate Insolvency Resolution Process (CIRP). Accurate valuation is crucial for ensuring transparency and fairness in the resolution process, aiding creditors and other stakeholders in making informed decisions.

Key Aspects of Valuation under Regulation 27:

  • Appointment of Registered Valuers: The Resolution Professional (RP) is required to appoint two registered valuers to determine the fair value and liquidation value of the assets of the corporate debtor. These valuers must be registered with the Insolvency and Bankruptcy Board of India (IBBI).
  • Independent Valuation: The appointed valuers must conduct independent valuations, ensuring objectivity and impartiality. This helps in establishing a reliable basis for the resolution plan and the distribution of proceeds.
  • Methodology and Approach: The valuers must use internationally accepted valuation methodologies, which typically include:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Valuation Report: The valuers must submit detailed valuation reports to the RP, including the methods and assumptions used, and the rationale for their conclusions. The reports should provide both fair value and liquidation value of the assets.
  • Use of Valuation Reports: The RP uses the valuation reports to prepare the Information Memorandum, which is shared with potential resolution applicants. These valuations are critical for formulating and evaluating resolution plans.
  • Third Valuer: If there is a significant difference between the two initial valuations, the RP may appoint a third valuer. The average of the two closest estimates is considered for decision-making.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 27 of the Insolvency Resolution Process for Corporate Persons Regulations, 2016, ensuring that all asset valuations are conducted with accuracy and transparency.

Regulation 35 of the Insolvency and Bankruptcy Board of India (IBBI) (Liquidation Process) Regulations, 2016, outlines the requirements for valuing assets during the liquidation process of a corporate debtor. Accurate valuation is essential to ensure transparency and fairness in the liquidation process, aiding creditors and stakeholders in making informed decisions.

Key Aspects of Valuation under Regulation 35:

  • Appointment of Registered Valuers: The liquidator is required to appoint at least two registered valuers within seven days of the liquidation commencement date. These valuers must be registered with the IBBI to ensure they meet the necessary professional standards.
  • Valuation Objectives: The valuers are tasked with determining the fair value and the liquidation value of the assets of the corporate debtor. Fair value represents the estimated price at which the assets would be exchanged between knowledgeable, willing parties in an arm’s length transaction. Liquidation value represents the estimated amount that the debtor’s assets would realize if sold in a forced or orderly liquidation.
  • Methodology and Approach: The valuers must use recognized and accepted valuation methods, such as:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: Each valuer must prepare a comprehensive report detailing the methods and assumptions used in the valuation. The report should clearly state both the fair value and the liquidation value of the assets.
  • Use of Valuation Reports: The liquidator uses these valuation reports to inform stakeholders and guide the liquidation process. These valuations help determine the reserve prices for the sale of assets and support the transparent distribution of proceeds.
  • Review and Adjustment: If the liquidator deems that the valuations need adjustment due to changes in market conditions or other factors, they may reassess the valuations to ensure they remain relevant and accurate.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 35 of the IBBI (Liquidation Process) Regulations, 2016, ensuring that all asset valuations are conducted with accuracy and transparency.

Section 59(3)(b)(ii) of the Insolvency and Bankruptcy Code (IBC) 2016, along with Regulation 3 of the IBBI (Voluntary Liquidation Process) Regulations, 2017, outlines the requirements for valuing assets during the voluntary liquidation process. Accurate valuation is essential to ensure transparency and fairness in the liquidation process, aiding creditors and stakeholders in making informed decisions.

Key Aspects of Valuation under Section 59(3)(b)(ii) and Regulation 3:

  • Initiation of Voluntary Liquidation: Voluntary liquidation can be initiated by a company when the majority of directors make a declaration stating that the company is solvent and able to pay its debts in full from the proceeds of assets to be sold during the liquidation.
  • Appointment of Registered Valuers: The liquidator is required to appoint at least two registered valuers to determine the fair value and liquidation value of the company’s assets. These valuers must be registered with the Insolvency and Bankruptcy Board of India (IBBI) to ensure they meet the necessary professional standards.
  • Valuation Objectives: The valuers are tasked with determining the fair value and liquidation value of the assets of the company. Fair value represents the estimated price at which the assets would be exchanged between knowledgeable, willing parties in an arm’s length transaction. Liquidation value represents the estimated amount that the assets would realize if sold in a forced or orderly liquidation.
  • Methodology and Approach: The valuers must use recognized and accepted valuation methods, such as:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: Each valuer must prepare a comprehensive report detailing the methods and assumptions used in the valuation. The report should clearly state both the fair value and the liquidation value of the assets.
  • Use of Valuation Reports: The liquidator uses these valuation reports to inform stakeholders and guide the liquidation process. These valuations help determine the reserve prices for the sale of assets and support the transparent distribution of proceeds.

At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 59(3)(b)(ii) of the IBC 2016 and Regulation 3 of the IBBI (Voluntary Liquidation Process) Regulations, 2017, ensuring that all asset valuations are conducted with accuracy and transparency.

The Securities and Exchange Board of India (SEBI) has established detailed regulations for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) to ensure transparency, governance, and investor protection. Regulation 21(8) under these regulations mandates rigorous valuation requirements for the purchase or sale of any project, ensuring that all transactions reflect the fair market value of the assets involved.

Key Aspects of Valuation under Regulation 21(8):

  • Independent Valuation: The valuation of projects for purchase or sale must be conducted by an independent valuer registered with SEBI. This ensures objectivity and reliability in the valuation process.
  • Valuation Methodology: The valuer must use appropriate and accepted valuation methods to determine the fair market value of the project. Common methodologies include:
    • Market Approach: This approach uses comparable market transactions to determine the value of similar assets in the market.
    • Income Approach: This method involves discounting future cash flows generated by the project to their present value using an appropriate discount rate.
    • Cost Approach: This approach estimates the current replacement cost of the project’s assets, accounting for depreciation and obsolescence.
  • Comprehensive Valuation Report: The valuer is required to prepare a detailed valuation report that includes:
    • The methodology and assumptions used in the valuation.
    • A comprehensive analysis of market conditions, asset performance, and other relevant factors.
    • The final determined value of the project.
  • Disclosure Requirements: The valuation report must be disclosed to the stock exchanges and made publicly available on the InvIT or REIT’s website. This ensures transparency and allows investors to make informed decisions based on the valuation.
  • Regular Updates: In addition to valuations for specific transactions, InvITs and REITs are required to conduct periodic valuations of their assets to ensure that their financial statements reflect current market values.
Company Act u/s 230 - Compromise & Arrangements
Section 230 of the Companies Act 2013 outlines the procedures for compromises, arrangements, and amalgamations between a company and its creditors or shareholders. Accurate valuation is a critical component of this process, ensuring fairness and transparency in the proposed arrangements. Key Aspects of Valuation under Section 230:
  • Purpose of Valuation: Valuations are required to determine the fair value of shares, assets, and liabilities involved in the compromise or arrangement. This is essential for gaining the confidence of creditors and shareholders, and for obtaining approval from regulatory authorities.
  • Independent Valuation: An independent valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker, must conduct the valuation. This ensures objectivity and reliability in the valuation process.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report outlining the methodology, assumptions, and basis of the valuation. The report should provide a clear and thorough analysis of the value of the assets, liabilities, and shares involved in the arrangement.
  • Regulatory Compliance: The valuation report is a critical document that must be submitted to the National Company Law Tribunal (NCLT) along with the scheme of compromise or arrangement. The NCLT uses this report to assess the fairness of the proposed scheme.
  • Stakeholder Approval: The valuation forms the basis for discussions and negotiations with creditors and shareholders. Accurate and transparent valuation is crucial for obtaining their approval and ensuring the successful implementation of the compromise or arrangement.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 230 of the Companies Act 2013, ensuring that all transactions are conducted with accuracy and transparency.
Company Act u/s 281 - Company Winding Up
Section 281 of the Companies Act 2013 deals with the valuation of assets in the event of winding up a company. This section outlines the procedures to ensure that all assets are accurately valued, thereby facilitating fair and transparent distribution among stakeholders. Key Aspects of Valuation under Section 281:
  • Purpose of Valuation: Valuations are required to determine the fair market value of the company’s assets at the time of winding up. This is essential for the equitable distribution of assets to creditors and shareholders.
  • Independent Valuation: An independent valuer, typically a Chartered Accountant or a SEBI-registered Category I Merchant Banker, must conduct the valuation. This ensures objectivity and credibility in the valuation process.
  • Detailed Valuation Report: The valuer must prepare a comprehensive report outlining the methodology, assumptions, and basis of the valuation. The report should provide a clear and thorough analysis of the value of all assets, including tangible and intangible assets.
  • Regulatory Compliance: The valuation report must comply with the regulatory requirements set forth in the Companies Act 2013. This includes adherence to prescribed valuation standards and guidelines.
  • Transparency and Fairness: Accurate valuation is crucial for ensuring that the winding-up process is transparent and fair. It helps in settling the claims of creditors and distributing any remaining assets among shareholders equitably.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 281 of the Companies Act 2013, ensuring that all asset valuations are conducted with accuracy and transparency.
IndAS 105 / IFRS 5 / ASC 360, 205 – Assets Held for Sale & Discontinued Operations

IndAS 105 / IFRS 5 / ASC 360, 205 – Non-current Assets Held for Sale and Discontinued Operations, provides guidelines for the classification, measurement, and presentation of non-current assets and disposal groups when they are intended to be sold. Accurate valuation is essential to ensure these assets are reported at their fair value, providing transparency and reliability in financial statements.

Key Aspects of Valuation under IndAS 105 / IFRS 5 / ASC 360, 205:

  • Classification as Held for Sale: Non-current assets or disposal groups must be classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. The sale should be highly probable, and the asset must be available for immediate sale in its present condition.
  • Measurement Requirements: Upon classification as held for sale, non-current assets and disposal groups must be measured at the lower of their carrying amount and fair value less costs to sell. This ensures that the assets are not overstated in the financial statements.
  • Fair Value Determination: The fair value of non-current assets held for sale is determined based on market-based evidence, using valuation techniques such as:
    • Market Approach: Using prices and other relevant information from market transactions involving identical or comparable assets.
    • Income Approach: Discounting future cash flows that the asset is expected to generate, using an appropriate discount rate.
    • Cost Approach: Estimating the amount that would be required to replace the service capacity of the asset (current replacement cost).
  • Impairment Considerations: If the fair value less costs to sell is lower than the carrying amount, an impairment loss must be recognized. This loss is recorded in the profit or loss account, ensuring that the asset is not overstated.
  • Disclosures: Ind AS 105 requires extensive disclosures about non-current assets held for sale, including a description of the assets, the facts and circumstances of the sale, and the effects on the financial statements.

At VSJC, we specialize in providing expert valuation services for non-current assets held for sale and discontinued operations, ensuring that your financial statements reflect the true value of your assets with accuracy and transparency.

IBC - Regulation 26 - Fast Track Insolvency
Regulation 26, read with Regulation 34 of the IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017, outlines the valuation requirements for the fast track insolvency resolution process. Accurate valuation is crucial in this accelerated process to ensure transparency and fairness, aiding creditors and stakeholders in making informed decisions swiftly. Key Aspects of Valuation under Regulation 26 and Regulation 34:
  • Appointment of Registered Valuers: The Resolution Professional (RP) is required to appoint two registered valuers within seven days of the insolvency commencement date. These valuers must be registered with the Insolvency and Bankruptcy Board of India (IBBI).
  • Valuation Objectives: The valuers are tasked with determining the fair value and liquidation value of the assets of the corporate debtor. Fair value is the estimated price at which the assets would be exchanged between knowledgeable, willing parties in an arm’s length transaction. Liquidation value is the estimated amount that the debtor’s assets would realize if sold in a forced or orderly liquidation.
  • Methodology and Approach: The valuers must use recognized and accepted valuation methods, including:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: Each valuer must prepare a comprehensive report detailing the methods and assumptions used in the valuation. The report should clearly state both the fair value and the liquidation value of the assets.
  • Use of Valuation Reports: The RP uses these valuation reports to inform stakeholders and guide the resolution process. These valuations help determine the reserve prices for the sale of assets and support the transparent distribution of proceeds.
  • Third Valuer: If there is a significant difference between the two initial valuations, the RP may appoint a third valuer. The average of the two closest estimates is considered for decision-making.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 26 read with Regulation 34 of the IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017, ensuring that all asset valuations are conducted with accuracy and transparency.
IBC - Regulation 27 - Valuations by RP
Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, provides guidelines for the valuation of assets during the Corporate Insolvency Resolution Process (CIRP). Accurate valuation is crucial for ensuring transparency and fairness in the resolution process, aiding creditors and other stakeholders in making informed decisions. Key Aspects of Valuation under Regulation 27:
  • Appointment of Registered Valuers: The Resolution Professional (RP) is required to appoint two registered valuers to determine the fair value and liquidation value of the assets of the corporate debtor. These valuers must be registered with the Insolvency and Bankruptcy Board of India (IBBI).
  • Independent Valuation: The appointed valuers must conduct independent valuations, ensuring objectivity and impartiality. This helps in establishing a reliable basis for the resolution plan and the distribution of proceeds.
  • Methodology and Approach: The valuers must use internationally accepted valuation methodologies, which typically include:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Valuation Report: The valuers must submit detailed valuation reports to the RP, including the methods and assumptions used, and the rationale for their conclusions. The reports should provide both fair value and liquidation value of the assets.
  • Use of Valuation Reports: The RP uses the valuation reports to prepare the Information Memorandum, which is shared with potential resolution applicants. These valuations are critical for formulating and evaluating resolution plans.
  • Third Valuer: If there is a significant difference between the two initial valuations, the RP may appoint a third valuer. The average of the two closest estimates is considered for decision-making.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 27 of the Insolvency Resolution Process for Corporate Persons Regulations, 2016, ensuring that all asset valuations are conducted with accuracy and transparency.
IBC - Regulation 35 - Liquidation Valuation
Regulation 35 of the Insolvency and Bankruptcy Board of India (IBBI) (Liquidation Process) Regulations, 2016, outlines the requirements for valuing assets during the liquidation process of a corporate debtor. Accurate valuation is essential to ensure transparency and fairness in the liquidation process, aiding creditors and stakeholders in making informed decisions. Key Aspects of Valuation under Regulation 35:
  • Appointment of Registered Valuers: The liquidator is required to appoint at least two registered valuers within seven days of the liquidation commencement date. These valuers must be registered with the IBBI to ensure they meet the necessary professional standards.
  • Valuation Objectives: The valuers are tasked with determining the fair value and the liquidation value of the assets of the corporate debtor. Fair value represents the estimated price at which the assets would be exchanged between knowledgeable, willing parties in an arm’s length transaction. Liquidation value represents the estimated amount that the debtor’s assets would realize if sold in a forced or orderly liquidation.
  • Methodology and Approach: The valuers must use recognized and accepted valuation methods, such as:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: Each valuer must prepare a comprehensive report detailing the methods and assumptions used in the valuation. The report should clearly state both the fair value and the liquidation value of the assets.
  • Use of Valuation Reports: The liquidator uses these valuation reports to inform stakeholders and guide the liquidation process. These valuations help determine the reserve prices for the sale of assets and support the transparent distribution of proceeds.
  • Review and Adjustment: If the liquidator deems that the valuations need adjustment due to changes in market conditions or other factors, they may reassess the valuations to ensure they remain relevant and accurate.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Regulation 35 of the IBBI (Liquidation Process) Regulations, 2016, ensuring that all asset valuations are conducted with accuracy and transparency.
IBC - u/s 59 & Regulation 3 - Voluntary Liquidation
Section 59(3)(b)(ii) of the Insolvency and Bankruptcy Code (IBC) 2016, along with Regulation 3 of the IBBI (Voluntary Liquidation Process) Regulations, 2017, outlines the requirements for valuing assets during the voluntary liquidation process. Accurate valuation is essential to ensure transparency and fairness in the liquidation process, aiding creditors and stakeholders in making informed decisions. Key Aspects of Valuation under Section 59(3)(b)(ii) and Regulation 3:
  • Initiation of Voluntary Liquidation: Voluntary liquidation can be initiated by a company when the majority of directors make a declaration stating that the company is solvent and able to pay its debts in full from the proceeds of assets to be sold during the liquidation.
  • Appointment of Registered Valuers: The liquidator is required to appoint at least two registered valuers to determine the fair value and liquidation value of the company’s assets. These valuers must be registered with the Insolvency and Bankruptcy Board of India (IBBI) to ensure they meet the necessary professional standards.
  • Valuation Objectives: The valuers are tasked with determining the fair value and liquidation value of the assets of the company. Fair value represents the estimated price at which the assets would be exchanged between knowledgeable, willing parties in an arm’s length transaction. Liquidation value represents the estimated amount that the assets would realize if sold in a forced or orderly liquidation.
  • Methodology and Approach: The valuers must use recognized and accepted valuation methods, such as:
    • Market Approach: Comparing the asset with similar assets in the market to determine its value.
    • Income Approach: Estimating the present value of future cash flows generated by the asset.
    • Cost Approach: Calculating the cost to replace the asset with a similar one, accounting for depreciation and obsolescence.
  • Detailed Valuation Report: Each valuer must prepare a comprehensive report detailing the methods and assumptions used in the valuation. The report should clearly state both the fair value and the liquidation value of the assets.
  • Use of Valuation Reports: The liquidator uses these valuation reports to inform stakeholders and guide the liquidation process. These valuations help determine the reserve prices for the sale of assets and support the transparent distribution of proceeds.
At VSJC, we are committed to delivering top-tier valuation services that support your needs under Section 59(3)(b)(ii) of the IBC 2016 and Regulation 3 of the IBBI (Voluntary Liquidation Process) Regulations, 2017, ensuring that all asset valuations are conducted with accuracy and transparency.
SEBI - Regulation 21 - Purchase or Sale of Project by Infra InvIT Trusts & ReIT
The Securities and Exchange Board of India (SEBI) has established detailed regulations for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) to ensure transparency, governance, and investor protection. Regulation 21(8) under these regulations mandates rigorous valuation requirements for the purchase or sale of any project, ensuring that all transactions reflect the fair market value of the assets involved. Key Aspects of Valuation under Regulation 21(8):
  • Independent Valuation: The valuation of projects for purchase or sale must be conducted by an independent valuer registered with SEBI. This ensures objectivity and reliability in the valuation process.
  • Valuation Methodology: The valuer must use appropriate and accepted valuation methods to determine the fair market value of the project. Common methodologies include:
    • Market Approach: This approach uses comparable market transactions to determine the value of similar assets in the market.
    • Income Approach: This method involves discounting future cash flows generated by the project to their present value using an appropriate discount rate.
    • Cost Approach: This approach estimates the current replacement cost of the project’s assets, accounting for depreciation and obsolescence.
  • Comprehensive Valuation Report: The valuer is required to prepare a detailed valuation report that includes:
    • The methodology and assumptions used in the valuation.
    • A comprehensive analysis of market conditions, asset performance, and other relevant factors.
    • The final determined value of the project.
  • Disclosure Requirements: The valuation report must be disclosed to the stock exchanges and made publicly available on the InvIT or REIT’s website. This ensures transparency and allows investors to make informed decisions based on the valuation.
  • Regular Updates: In addition to valuations for specific transactions, InvITs and REITs are required to conduct periodic valuations of their assets to ensure that their financial statements reflect current market values.