---
kind: "section"
citation: "11 C.F.R. § 116.4"
title: "11"
number: "116.4"
heading: "Forgiveness or settlement of debts owed to commercial vendors."
url: "https://uscodex.org/cfr/11/116.4"
---

# §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 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](/cfr/11/part100.md), [subpart C](/cfr/11/subpartC.md); or
  - (2) The commercial vendor has treated the debt in a commercially reasonable manner and the requirements of 11 CFR [116.7](/cfr/11/116.7.md) or [116.8](/cfr/11/116.8.md), 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](/cfr/11/part100.md), [subpart C](/cfr/11/subpartC.md); or
  - (2) The corporation has treated the debt in a commercially reasonable manner and the requirements of 11 CFR [116.7](/cfr/11/116.7.md) or [116.8](/cfr/11/116.8.md), 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](/cfr/11/116.8.md)), or settled (see [11 CFR 116.7](/cfr/11/116.7.md)), provided that—
  - (1) The amount forgiven is exempted from the definition of contribution in [11 CFR part 100](/cfr/11/part100.md), [subpart C](/cfr/11/subpartC.md); 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](/cfr/11/116.7.md) or [116.8](/cfr/11/116.8.md), 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](/cfr/11/116.3.md);
  - (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)](/cfr/11/104.3.md?p=d) and [104.11](/cfr/11/104.11.md) until the Commission has completed a review of the debt settlement plan pursuant to [11 CFR 116.7(f)](/cfr/11/116.7.md?p=f) or until the Commission has completed a review of the request to forgive the debt pursuant to [11 CFR 116.8](/cfr/11/116.8.md), or until the political committee pays the debt, whichever occurs first.

## Notes

### Amendments

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

### Authority

Authority: 52 U.S.C. 30103(d), 30104(b)(8), 30111(a)(8), 30116, 30118, and 30141.

### Source

Source: 55 FR 26386, June 27, 1990, unless otherwise noted.

### Amendments

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