IBBI reiterates that only a valuation done by a registered valuer will be deemed to be legal for the purposes of a corporate insolvency resolution process. A valuation done by any other valuer shall be deemed illegal.
The Insolvency and Bankruptcy Board of India (“IBBI”) issued a circular (“new circular”) on August 13, 2019, reiterating its position on the appointment of registered valuer under the provisions of Insolvency and Bankruptcy Code (“IBC”).
Earlier in October, 2018 IBBI issued a circular on Valuation under the IBC, 2016 in which it was explained that valuation under IBC shall only be done by registered valuer. Registered Valuer is defined in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as “a person registered as such in accordance with the Companies Act, 2013 and rules made thereunder.” It was also stated that from February 1, 2019, no insolvency professional shall appoint any person other than a registered valuer to conduct any valuation under the IBC.
In the new circular, IBBI reiterates that the valuation under IBC will be done only by the registered valuer and if the valuation is done by any other person then it shall be considered as illegal and violative of the circular. It is also clarified that if any payment is done to a person valuating other than a registered valuer, in form of fees or any other manner shall not be considered a part of insolvency resolution process costs or liquidation costs.
The IBBI has issued this new circular to reiterate that valuation under IBC has to be mandatorily done by a registered valuer only. The circular only stated that valuation shall not be done by any person other than a registered valuer but the new circular renders such valuation by person other than a registered valuer as illegal and violative of the circular. IBBI through this new circular has clarified on the validity of any valuation done by a person other than a registered valuer.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.