The Insolvency and Bankruptcy Board of India (IBBI) has announced that each valuation conducted under the Insolvency and Bankruptcy Code (IBC) will now require a unique valuation report identification number (VRIN). This is expected to help verify the genuineness of the valuation.
Currently, valuation under IBC is done only by a registered valuer (RV)/ registered valuers entity (RVE), which submits reports without any reference number.
Now, the RV/RVE would need to login to a module hosted on the IBBI website using credentials provided by the board.
- Also read: India witnesses 43% surge in successful insolvency resolutions, pendency declines in FY24
Before submitting a valuation report, they must generate a unique VRIN and mention it on the front page of the report, an IBBI circular stipulated on Monday.
IBBI is the designated authority — under the Companies (Registered Valuers and Valuation) Rules, 2017 — for registration, monitoring and development of valuers.
The IBBI website also allows stakeholders to authenticate the report using the VRIN.
Experts’ take
Hari Hara Mishra, CEO, Association of ARCs in India, welcomed the move towards digitalisation of the valuation database through the unique ID. “This is akin to the existing system of DIN (for directors)/ CIN (for companies) and will help identify a valuation report, establish its authenticity, and improve data retrieval for decision-making. More and more technological intervention will aid the various systems and processes around IBC,” he added.
Anjali Jain, Partner at Areness law, said that the requirement of mandatory pre-submission of the valuation report over the designated online module would mitigate the potential biases or any subsequent alterations, variations etc. in the submission process of the valuation report.
The untainted and original report would now be accessible to stakeholders indicating that process refinement is on the cards of IBBI for retaining IBC as a successful reform, she said. “The integration of technology to overcome market and process challenges is applaudable and more transparency, authenticity etc. is assured in the process,” Jain added.
Anoop Rawat, Partner, Shardul Amarchand Mangaldas & Co, said that IBBI circular creates an authentication process for the valuation reports. Once issued, any recipient can check its authenticity on the IBBI website by using VRIN, he said.
Sukrit Kapoor, Partner, King Stubb & Kasiva, Advocates and Attorneys, said “an accurate valuation is one of the most important facets of a CIRP [corporate insolvency resolution process]. This is a welcome move to enhance transparency in the overall resolution process”.
There have been issues over confirming authenticity of valuation reports in the past. “With the introduction of VRINs, each report shall be uniquely identifiable, adding to the authenticity. Resolution professionals will henceforth accept only valuation reports with a VRIN,” Kapoor said.