[Code of Federal Regulations]
[Title 11, Volume 1]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 11CFR116.4]

[Page 240-241]
 
                       TITLE 11--FEDERAL ELECTIONS
 
                 CHAPTER I--FEDERAL ELECTION COMMISSION
 
PART 116_DEBTS OWED BY CANDIDATES AND POLITICAL COMMITTEES--Table of 
Contents
 
Sec.  116.4  Forgiveness or settlement of debts owed to commercial 
vendors.

    (a) Unincorporated vendor. A commercial vendor that is not a 
corporation may forgive or settle a debt incurred by a candidate, a 
political committee or another person on behalf of a candidate or 
political committee for less than the entire amount owed on the

[[Page 241]]

debt. The amount forgiven will not be considered a contribution by the 
commercial vendor to the candidate or political committee if--
    (1) The amount forgiven is exempted from the definition of 
contribution in 11 CFR part 100, subpart C; or
    (2) The commercial vendor has treated the debt in a commercially 
reasonable manner and the requirements of 11 CFR 116.7 or 116.8, as 
appropriate, are satisfied.
    (b) Incorporated vendor. A corporation may not forgive or settle a 
debt incurred by a candidate, a political committee or another person on 
behalf of a candidate or political committee for less than the entire 
amount owed on the debt unless--
    (1) The amount forgiven is exempted from the definition of 
contribution in 11 CFR part 100, subpart C; or
    (2) The corporation has treated the debt in a commercially 
reasonable manner and the requirements of 11 CFR 116.7 or 116.8, as 
appropriate, are satisfied.
    (c) Reasonable efforts by a political committee. A debt or 
obligation owed by a candidate or a political committee may be totally 
forgiven (see 11 CFR 116.8), or settled (see 11 CFR 116.7), provided 
that--
    (1) The amount forgiven is exempted from the definition of 
contribution in 11 CFR part 100, subpart C; or
    (2) The candidate and the political committee have undertaken all 
reasonable efforts to satisfy the outstanding debt and the requirements 
of 11 CFR 116.7 or 116.8, as appropriate, including the submission of 
the information specified in those sections and Commission review, are 
satisfied.
    (d) Commercially reasonable. The Commission will determine that a 
debt settlement between a political committee and a commercial vendor is 
commercially reasonable if--
    (1) The initial extension of credit was made in accordance with 11 
CFR 116.3;
    (2) The candidate or political committee has undertaken all 
reasonable efforts to satisfy the outstanding debt. Such efforts may 
include, but are not limited to, the following--
    (i) Engaging in fundraising efforts;
    (ii) Reducing overhead and administrative costs; and
    (iii) Liquidating assets; and
    (3) The commercial vendor has pursued its remedies as vigorously as 
it would pursue its remedies against a nonpolitical debtor in similar 
circumstances. Such remedies may include, but are not limited to, the 
following--
    (i) Oral and written requests for payment;
    (ii) Withholding delivery of additional goods or services until 
overdue debts are satisfied;
    (iii) Imposition of additional charges or penalties for late 
payment;
    (iv) Referral of overdue debts to a commercial debt collection 
service; and
    (v) Litigation.
    (e) Settlement or forgiveness not required. The provisions of this 
part shall not be construed to require a commercial vendor to forgive or 
settle the debt for less than the entire amount owed.
    (f) Reporting. The political committee shall continue to report the 
debt in accordance with 11 CFR 104.3(d) and 104.11 until the Commission 
has completed a review of the debt settlement plan pursuant to 11 CFR 
116.7(f) or until the Commission has completed a review of the request 
to forgive the debt pursuant to 11 CFR 116.8, or until the political 
committee pays the debt, whichever occurs first.

[55 FR 26386, June 27, 1990, as amended at 67 FR 78682, Dec. 26, 2002]