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ARTICLE · 27 NOVEMBER 2018

Liquidation Value Of The Asset In The Resolution Plan

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After the submission of the valuers reports, the average of the two closest estimates shall be considered the liquidation value.

IndiaInsolvency/Bankruptcy/Re-Structuring
S&A Law Offices
S&A Law Offices
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The term "Liquidation value" has been defined in the Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations). The Regulation defines the "liquidation value" as the estimated realizable value of the assets of the corporate debtor if the corporate debtor were to be liquidated on the insolvency commencement date. The cursory reading of the regulation shows that estimated value of the assets of the corporate debtor at the time of the liquidation on the commencement date of the insolvency will be considered as the liquidation value for the purpose of the Insolvency process and such value will be used in the Information Memorandum under Regulation 36 of the CIRP Regulations. This estimated value is based on the principle of vertical comparison as used under the United States Bankruptcy Code. According to this principle, the creditor should not be placed in a situation which is

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