Fair value now mandatory in insolvency resolution process

Under the amendments introduced in the Insolvency and Bankruptcy Code (IBC), it is compulsory for the resolution professionals to ascertain "fair value" of the corporate debtor besides the liquidation value.

With an aim to bring more transparency in the resolution process, the government has made fair valuation mandatory for bankrupt companies mandatory.
 
Under the amendments introduced in the Insolvency and Bankruptcy Code (IBC), it is compulsory for the resolution professionals to ascertain "fair value" of the corporate debtor besides the liquidation value.
 
The move will also help ensure better realisations for assets undergoing resolution process.
 
As per the amendments, the resolution professional shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor. 
 
The resolution professional, then, shall provide the fair value and the liquidation value to the committee of creditors on confidentiality. 
 
Eleven out of 12 companies have been referred to the National Company Law Tribunal for insolvency proceedings, after the Reserve Bank of India’s directive in June 2017. 
 
Source: Media reports

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