8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 13, 2006

BPI Energy Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

British Columbia, Canada	001-32695	75-3183021
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
30775 Bainbridge Road, Suite 280, Solon, Ohio		44139
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code    (440) 248-4200   

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On June 13, 2006, BPI Energy Holdings, Inc. (the “Company”) entered into a settlement memorandum of understanding with Colt LLC, AFC Coal Properties, Inc., American Premier Underwriters, Inc. and Central States Coal Reserves of Illinois, LLC. These parties were defendants in a lawsuit filed by the Company on March 15, 2006 relating to the Company’s Southern Illinois Basin Project.

The memorandum of understanding provides that all parties to the lawsuit will release all of the other parties from any claims they may have had against each other, the Company will pay Colt LLC $3,000,000 and the Company will surrender any interest it had in the lease. In addition, the Company acquired ownership of the coalbed methane (CBM) estate covering approximately 10,000 of the 43,000 acres previously covered by the lease (which acreage includes all of the currently producing CBM wells and proved reserves at the Company’s Southern Illinois Basin Project). The Company will be relieved of any future obligation to make royalty payments as was previously required under the terms of the lease (under the terms of the lease, the Company was obligated to make royalty payments of 15% of gross sales and minimum royalties totaling at least $42,000 per month). Lastly, the quitclaim deed to be executed by Colt LLC will provide that CBM operations take priority over coal mining operations for as long as CBM is being produced from the covered acreage. However, Colt LLC has the right to acquire any CBM wells located in these 10,000 acres. If Colt LLC exercises this option, they will be required to pay the fair market value (as established by a mutually agreed upon expert) of such well.

The Company expects to sign a formal settlement agreement within the next 30 days.

ITEM 2.02 Results of Operations and Financial Condition.

On June 14, 2006, BPI Energy Holdings, Inc. (the “Company”) issued a press release reporting its financial results for the third quarter ended April 30, 2006. A copy of the Company’s press release is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K.

The information contained in this Current Report on Form 8-K under Item 2.02, including the exhibit attached hereto as Exhibit 99.2, is being furnished to the Securities and Exchange Commission and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, the information contained in this Current Report on Form 8-K under Item 2.02 shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(d)	Exhibits.
10.1	Settlement Memorandum of Understanding by and among BPI Energy, Inc., Colt LLC, AFC Coal Properties, Inc., American Premier Underwriters, Inc. and Central States Coal Reserves of Illinois, LLC, dated June 13, 2006 (Filed as Exhibit 10.3 to the Form 10-Q of BPI Energy Holdings, Inc. filed with the SEC on June 14, 2006 and incorporated herein by reference).
99.1	Press Release of BPI Energy Holdings, Inc. dated June 13, 2006.
99.2	Press Release of BPI Energy Holdings, Inc. dated June 14, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BPI Energy Holdings, Inc.
By:	/s/ George J. Zilich
	George J. Zilich
	Chief Financial Officer and General Counsel

Date: June 15, 2006

EXHIBIT INDEX

Exhibit No.	Description
10.1	Settlement Memorandum of Understanding by and among BPI Energy, Inc., Colt LLC, AFC Coal Properties, Inc., American Premier Underwriters, Inc. and Central States Coal Reserves of Illinois, LLC, dated June 13, 2006 (Filed as Exhibit 10.3 to the Form 10-Q of BPI Energy Holdings, Inc. filed with the SEC on June 14, 2006 and incorporated herein by reference).
99.1	Press Release of BPI Energy Holdings, Inc. dated June 13, 2006.
99.2	Press Release of BPI Energy Holdings, Inc. dated June 14, 2006.

EX-99.1

Exhibit 99.1

30775 Bainbridge Road, Suite 280
Solon, OH 44139 U.S.A.
Tel: (440) 248-4200
Fax: (440) 249-4240

Press Release FOR IMMEDIATE RELEASE

BPI Energy Enters Into Memorandum of Understanding With Colt and All Other Defendants in Litigation

BPI Retains Existing Wells and Production at Its Southern Illinois Basin Project

Cleveland, OH—June 13, 2006—BPI Energy (“BPI”) (Amex: BPG), an independent energy company engaged in the exploration, development and commercial sale of coalbed methane (CBM) in the Illinois Basin, announced that the company has executed a Memorandum of Understanding (MOU) with Colt LLC and other interested parties resolving, in principle, the previously disclosed lawsuit between BPI and Colt and other defendants. A formal settlement agreement is scheduled to be executed within the next 30 days.

Previously, BPI filed a complaint in the U.S. District Court for the Southern District of Ohio alleging tortious interference with business relations and breach of contract related to the interruptions of development plans at its Southern Illinois Basin Project (formerly named the Delta Project). Subsequently, Colt filed a counterclaim where it had sought a declaratory judgment asking the court to declare that: (a) horizontal drilling is prohibited under the Lease; (b) BPI breached the Lease; (c) the Lease automatically terminated due to BPI’s failure to cure its alleged breaches; (d) the Lease automatically terminated by its own terms on April 3, 2006; and (e) to the extent the Lease had already terminated, BPI was wrongfully holding over and/or trespassing, and Colt is entitled to an award of damages as a result.

BPI has agreed to make a lump-sum payment of $3 million to Colt and will be no longer obligated to make any future royalty payments to Colt or any of the other defendants. The MOU executed today stipulates that (i) both the complaint and counterclaim will be discharged; (ii) the lease will be terminated; and (iii) BPI will own the CBM estate (i.e., all CBM rights) on approximately 10,000 acres (including all of its producing wells). Furthermore, BPI’s CBM operations will have superior rights to coal mining on approximately 9,000 of these 10,000 acres. BPI also has the right to drill additional wells as it chooses on these same 9,000 acres. BPI will also grant Colt the option to acquire (with the obligation to immediately plug) any of BPI’s CBM wells in the designated parcels. These potential well acquisitions will be based on the fair market value of the wells plus the associated reserves as determined by a mutually agreed upon expert.

President and Chief Executive Officer James G. Azlein stated, “We are pleased to have reached a settlement that will avoid costly and lengthy litigation and allow us to focus on exploring for and producing CBM as efficiently as possible. Although we have agreed to give up our rights to 33,000 of the 43,000 acres at our Southern Illinois Basin Project, we have retained all of our production and over the last 60 days have increased our total acreage position in the Basin by 82,000 acres to approximately 500,000 acres.”

Commenting on the lump-sum payment to Colt, Azlein stated, “Rather than being a lessee of the CBM estate, BPI will be 100 percent owner of the CBM estate, which will have priority over coal-mining operations for as long as CBM is being produced from the designated parcels. Moreover, this settlement may have a significant positive financial impact on BPI since the estimated present value of the royalty payments, based on our projections, under the terms of the original lease would exceed the $3 million one-time consideration.”

Regarding the shut-in wells at the Southern Illinois Basin Project, Azlein said, “In order to maximize our acreage rights under the original lease, we shut in 17 wells in late March 2006. Nine of those wells are drilled into abandoned mine works (“CMM wells”) and eight are CBM wells. As a result of the settlement, we will plug three of the nine CMM wells and five of the eight CBM wells, which reside outside of the parcels designated to BPI. We expect to place the three other CBM wells back into production immediately. We believe we have the opportunity to reduce our operating costs by utilizing the gas produced from the CMM wells in our production operations. Additionally, we are evaluating the opportunity to blend the CMM gas with our CBM production, thereby further increasing sales volume.”

“We continue to move forward simultaneously on two independent fronts. Our recently launched development at the Northern Illinois Basin Project is progressing on plan. We are installing the gas-gathering system and expect to be fracturing the initial wells and completing the water disposal system at the site in the next several weeks,” Azlein concluded.

To be added to BPI Energy’s e-mail distribution list, please click on the link below:

http://www.clearperspectivegroup.com/clearsite/bpi/emailoptin.html

About BPI Energy

BPI Energy (BPI) is an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, which covers approximately 60,000 square miles in Illinois, southwestern Indiana and northwestern Kentucky. The company currently controls the dominant CBM acreage position in the Illinois Basin.

Some of the statements contained in this press release may be deemed to be forward-looking in nature, outlining future expectations or anticipated operating results or financial conditions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results or conditions to differ materially from the information expressed or implied by these forward-looking statements. Some of the factors that could cause actual results or conditions to differ materially from our expectations, include, but are not limited to: (a) our inability to generate sufficient income or obtain sufficient financing to fund our operating plan through April 30, 2007, (b) our inability to retain our acreage rights at our projects at the expiration of our lease agreements, due to insufficient CBM

production or other reasons, (c) our failure to accurately forecast CBM production, (d) displacement of our CBM operations by coal mining operations, which have superior rights in most of our acreage, (e) our failure to accurately forecast the number of wells that we can drill, (f) a decline in the prices that we receive for our CBM production, (g) our failure to accurately forecast operating and capital expenditures and capital needs due to rising costs or different drilling or production conditions in the field, (h) our inability to attract or retain qualified personnel with the requisite CBM or other experience, and (i) unexpected economic and market conditions, in the general economy or the market for natural gas. We caution readers not to place undue reliance on these forward-looking statements.

News releases and other information on the company are available on the Internet at:

http://www.bpi-energy.com

CONTACT:

BPI Investor Relations
Clear Perspective Group, LLC
Matthew J. Dennis, CFA
Sr. Managing Director
(440) 353-0552

* * * * * *

EX-99.2

Exhibit 99.2

30775 Bainbridge Road, Suite 280
Solon, OH 44139 U.S.A.
Tel: (440) 248-4200
Fax: (440) 249-4240

Press Release FOR IMMEDIATE RELEASE

BPI Energy Announces Fiscal 2006 Third-Quarter Financial Results

Cleveland, OH—June 14, 2006—BPI Energy (“BPI”) (Amex: BPG), an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, announced financial results for the three- and nine-month periods ended April 30, 2006.

Fiscal third-quarter 2006 revenues from gas sales totaled $263,000, compared with $47,000 for the comparable prior-year quarter—an increase of 460 percent. For the first nine months of fiscal year 2006, revenues from gas sales increased more than tenfold to $800,000, compared with $53,000 for the same period a year ago.

The company reported a net loss of $4.9 million, or $0.07 per share, for the fiscal 2006 third quarter versus last year’s third-quarter net loss of $1.7 million, or $0.04 per share. For the nine-month period, the reported net loss was $7.0 million, or $0.12 per share, compared with a net loss of $4.6 million, or $0.13 per share, for the like period a year ago. Both fiscal 2006 periods include a charge of approximately $3.0 million related to the dispute settlement at BPI’s Southern Illinois Basin Project, which was recorded in the fiscal 2006 third quarter.

President and Chief Executive Officer James G. Azlein commented, “We are gratified to see our average gas production sales volume continuing to ramp up on a sequential basis at our Southern Illinois Basin Project. The volume of gas sales during the fiscal 2006 third quarter was 32 percent higher than in the second quarter and 82 percent over the volume in the first quarter. We expect gas sales volumes will continue to increase as our producing wells dewater further and those wells that were formerly shut in due to our recently resolved legal dispute are brought on line.”

BPI plans to file its fiscal 2006 third-quarter 10-Q Report with the Securities and Exchange Commission later today. For a more complete discussion of operations and financial position, please refer to the 10-Q Report.

To be added to BPI Energy’s e-mail distribution list, please click on the link below:

http://www.clearperspectivegroup.com/clearsite/bpi/emailoptin.html

—Financial Results Follow—

BPI Energy Holdings, Inc.
Consolidated Statements of Operations (Unaudited)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2006			2005			2006			2005
Revenues:
Gas sales	$	262,860		$	46,925		$	800,365		$	53,266
Expenses:
Lease operating expense		290,844			203,289			752,454			203,289
General and admin. expenses		2,054,434			1,847,554			4,491,676			5,012,641
Depreciation, depletion and amortization		189,988			83,129			402,680			140,801
		2,535,266			2,133,972			5,646,810			5,356,731
Other income (expenses):
Interest income		229,888			62,012			632,693			66,859
Interest expense		(4,276	)		(3,804	)		(18,054	)		(14,386	)
Other income (expense), net		(2,894,794	)		24,053			(2,757,271	)		27,299
		(2,669,182	)		82,261			(2,142,632	)		79,772
Loss before income taxes		(4,941,588	)		(2,004,786	)		(6,989,077	)		(5,223,693	)
Deferred income tax benefit		—			270,587			—			615,304
Net loss	$	(4,941,588	)	$	(1,734,199	)	$	(6,989,077	)	$	(4,608,389	)
Basic and diluted loss per share		($0.07	)		($0.04	)		($0.12	)		($0.13	)
Weighted average common shares outstanding		66,395,782			43,128,791			60,686,413			35,640,418

BPI Energy Holdings, Inc.
Consolidated Balance Sheets (Unaudited)

	April 30, 2006		July 31, 2005
Current assets:
Cash and cash equivalents	$	24,793,727	$	7,251,503
Other current assets		351,126		58,205
Total current asset		25,144,853		7,309,708
Net property and equipment		26,970,439		15,110,113
Other non-current assets		295,298		1,107,891
Total assets	$	52,410,590	$	23,527,712
Current liabilities:
Accounts payable		897,010		2,144,066
Accrued liabilities and other		3,240,134		73,632
Total current liabilities		4,137,144		2,217,698
Long-term notes payable		83,458		507,595
Other non-current liabilities		51,678		—
Total liabilities		4,272,280		2,725,293
Total shareholders’ equity		48,138,310		20,802,419
Total liabilities and shareholders’ equity	$	52,410,590	$	23,527,712

About BPI Energy

BPI Energy (BPI) is an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, which covers approximately 60,000 square miles in Illinois, southwestern Indiana and northwestern Kentucky. The company currently controls the dominant CBM acreage position in the Illinois Basin.

Some of the statements contained in this press release may be deemed to be forward-looking in nature, outlining future expectations or anticipated operating results or financial conditions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results or conditions to differ materially from the information expressed or implied by these forward-looking statements. Some of the factors that could cause actual results or conditions to differ materially from our expectations, include, but are not limited to: (a) our inability to generate sufficient income or obtain sufficient financing to fund our operating plan through April 30, 2007, (b) our inability to retain our acreage rights at our projects at the expiration of our lease agreements, due to insufficient CBM production or other reasons, (c) our failure to accurately forecast CBM production, (d) displacement of our CBM operations by coal mining operations, which have superior rights in most of our acreage, (e) our failure to accurately forecast the number of wells that we can drill, (f) a decline in the prices that we receive for our CBM production, (g) our failure to accurately forecast operating and capital expenditures and capital needs due to rising costs or different drilling or production conditions in the field, (h) our inability to attract or retain qualified personnel with the requisite CBM or other experience, and (i) unexpected economic and market conditions, in the general economy or the market for natural gas. We caution readers not to place undue reliance on these forward-looking statements.

News releases and other information on the company are available on the Internet at:

http://www.bpi-energy.com

CONTACT:

BPI Investor Relations
Clear Perspective Group, LLC
Matthew J. Dennis, CFA
Sr. Managing Director
(440) 353-0552

* * * * * *