When certain events occur that result in the cancellation of a debt, IRS rules require that either a 1099-A or 1099-C be filed. The explanation of the events that trigger a filing is long and complex, so I do recommend that you pull down and review the instructions available on the IRS' website. Consult with a qualified tax adviser if the instructions are not clear.
This isn't a matter of discretion that management can decide.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8