8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  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): January 14, 2009

BioFuel Energy Corp.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-33530	20-5952523
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1600 Broadway, Suite 2200

Denver, CO  80202

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (303) 592-8110

N/A

 (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 (see General Instruction A.2. below):

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

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

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

o     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 January 16, 2009, BIOFUEL ENERGY CORP. (NASDAQ: BIOF) announced that its wholly owned subsidiary, BioFuel Energy, LLC (the “Company”), had entered into an agreement with Cargill, Incorporated (“Cargill”) that resolves all issues between Cargill and the Company related to hedging and fixed-price purchase contracts with respect to corn (the “Cargill Agreement”).  Under the terms of the Cargill Agreement, the Company paid Cargill $3.0 million on December 5, 2008 and, in light of such payment and all future payments, (i) the parties established a repayment plan, (ii) the Company’s outstanding debt to Cargill was approximately $11.4 million, (iii) Cargill will forgo all interest through November 30, 2008 and (iv) interest will accrue on the current amount outstanding at a rate of 5% per annum as of December 1, 2008.

Simultaneously, the Company also entered into a Waiver and Amendment Agreement (the “Amendment”) to the Loan Agreement dated September 25, 2006, by the Company, the Lenders party thereto, and Greenlight APE, LLC, as administrative agent.  As of the date of this announcement, the Company owed approximately $20.0 million in aggregate principal under the Loan Agreement.  Under the terms of the Amendment, the Lenders have agreed that, upon receipt of an initial $2.0 million payment in respect of accrued interest and principal from the Company, (i) the outstanding balance of the loans will accrue interest at a rate of 5% per annum until Cargill has been fully repaid and (ii) no further payments will be due to the Lenders until Cargill has received an additional $2.8 million of payments.  Previously, the interest rate on the outstanding loans was 15% per annum.  The interest rate on the outstanding loans had increased to 17% on October 6, 2008 when the Company missed its scheduled interest payment. As of the date of this announcement, as a result of the initial payment described above, the balance owed by the Company under the Loan Agreement was approximately $19.4 million.

Both Cargill and the Lenders have agreed that all future payments due them will be contingent on available cash at the Company, which term is defined in the agreements.

The above descriptions are only a summary of the material terms of the agreements and do not purport to be complete.  You are advised to refer to the actual terms of the Cargill Agreement and the Amendment, which are attached to this report and incorporated by reference herein, for the full details of both agreements.

Item 9.01.Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Description
10.1	Waiver and Amendment Agreement dated as of January 14, 2009.
10.2	Cargill Agreement dated as of January 14, 2009.
99.1	Press Release dated January 16, 2009 announcing entry into agreements.

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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.

	BIOFUEL ENERGY CORP.
Date: January 16, 2009	By:	/s/ Kelly Maguire
	Name:		Kelly Maguire
	Title:		Vice President and Chief Financial Officer

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Exhibit Index

Exhibit No.	Description
10.1	Waiver and Amendment Agreement dated as of January 14, 2009.
10.2	Cargill Agreement dated as of January 14, 2009.
99.1	Press Release dated January 16, 2009 announcing entry into agreements.

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EX-10.1

Exhibit 10.1

EXECUTION VERSION

WAIVER AND AMENDMENT AGREEMENT dated as of January 14, 2009 (this “Agreement”) among BioFuel Energy, LLC, a Delaware limited liability company (the “Borrower”), certain affiliates of Greenlight Capital, Inc. and Third Point LLC as listed on Schedule A attached hereto (such affiliates, the “Lenders”), and Greenlight APE, LLC, as Administrative Agent (the “Agent”).

RECITALS

WHEREAS, pursuant to a loan agreement dated September 25, 2006, among the Borrower, the Lenders and the Agent (the “Loan Agreement”), the Lenders have made loans to the Borrower on the terms and subject to the conditions set forth therein, $20.0 million aggregate principal amount of which remain outstanding (the “Loans”);

WHEREAS, on September 30, 2008, the Borrower did not pay, and has not paid to date, the quarterly interest payment then due with respect to the Loans, and on December 31, 2008, the Borrower did not pay, and has not paid to date, the quarterly interest payment then due with respect to the Loans, which non-payments constituted individually, on the third Business Day thereafter, an Event of Default under the Loan Agreement (the “Default”);

WHEREAS, immediately prior to the execution and delivery of this Agreement, the Borrower entered into an agreement (the “Cargill Settlement”) with Cargill, Incorporated (“Cargill”), which addresses the satisfaction over time of certain amounts owed to Cargill by the Borrower (the “Cargill Payable”); and

WHEREAS, the Borrower has requested certain waivers and other modifications to the Loan Agreement, as set forth herein, and the Lenders have agreed to such waivers and other modifications, in each case, on the terms, subject to the conditions and to the extent set forth herein;

NOW, THEREFORE, in consideration of the foregoing, the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I

Definitions

SECTION 1.01.  Definitions.  Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Loan Agreement.  In addition to the terms defined elsewhere herein, the following terms shall have the following meanings:

“Available Cash Received” shall mean:

(a) 100% of the cash proceeds actually received by the Borrower after the date of this Agreement from its subsidiaries by way of dividend or distribution in compliance with the subsidiaries’ credit facilities, other than (i) any such cash proceeds consisting of management fees paid by such subsidiaries in compliance with their credit facilities (which are currently $800,000.00 per month) and (ii) any other such cash proceeds reasonably required to be spent or reserved by the Borrower for payment of professional fees, taxes, employee compensation or other similar matters; and

(b) 50% of the cash proceeds actually received by the Borrower after the date of this Agreement from any Equity Issuance (or cash contribution from holders of Equity Interests) or incurrence of indebtedness for borrowed money, net of all taxes and customary fees, commissions, costs and other expenses incurred in connection therewith.

“Cargill Designated Funds” shall mean (i) until the Cash Reallocation Trigger, 100% of Available Cash Received and (ii) thereafter, 50% of Available Cash Received.

“Cash Reallocation Trigger” means the payment by the Borrower to Cargill after the date hereof of an aggregate of $2,800,828.57 in satisfaction of the Cargill Payable pursuant to Article III of the Cargill Settlement.

“Equity Issuance” shall mean any issuance or sale by the Borrower of any Equity Interests thereof, except in each case for (i) any such issuance or sale to its subsidiaries and (ii) any such issuance or sale to management, employees or directors of the Borrower, BioFuel Energy Corp. or any of the Borrower’s subsidiaries pursuant to an employee or director stock option or stock purchase plan or an employee or director benefit plan.

“Equity Interests” shall mean shares of capital stock, membership interests or other equity interests, and any option, warrant or other right entitling the holder thereof to purchase or otherwise acquire an equity interest.

“Penalty Interest” shall mean any interest accrued on the Loans as a result of the increase in the interest rate thereon from 15% to 17% as a result of the Default (i.e., the difference between the total interest that would have accrued at 17% and the total interest that would have accrued at 15%).

ARTICLE II

Payment and Waiver

SECTION 2.01.  Payment of $2,000,000.00.  In consideration of the Lenders executing this Agreement, within five Business Days hereof, the Borrower shall

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make a payment to the Agent at the Principal Office for the ratable accounts of the Lenders in U.S. Dollars and in immediately available funds in an aggregate amount of $2,000,000.00 (the “Initial Payment”).  Such payment shall be allocated $766,666.67 to payment of accrued and unpaid interest on the Loans due September 30, 2008, and $1,233,333.33 to reduction of the outstanding principal amount of the Loans.

SECTION 2.02.  Waiver of Event of Default.  Effective upon receipt of the Initial Payment, the Lenders hereby permanently and irrevocably waive (a) the Default and (b) any and all Penalty Interest.  This Section 2.02 shall be null and void in the event that the Initial Payment is not timely paid.

ARTICLE III

Further Actions

SECTION 3.01.  Future Payments to Lenders.  (a) The Lenders and the Agent acknowledge and agree that, notwithstanding anything to the contrary in the Loan Agreement, but subject to Section 3.01(c) below:

(i) other than pursuant to Section 2.01 hereof, the Borrower shall not be obligated to make any further cash payments of principal, interest or other amounts (including mandatory prepayments) in respect of the Loans until the Cash Reallocation Trigger has occurred (and at such time shall only be obligated to make payments as set forth in sub-clause (ii) of this Section 3.01(a)); and

(ii) from the time of the Cash Reallocation Trigger until the Cargill Payable has been fully satisfied pursuant to the Cargill Settlement, upon the receipt of any Available Cash Received in excess of $100,000.00 (it being understood that Available Cash Received not in excess of such amount shall be included in subsequent calculations of Available Cash Received), the Borrower will, within three Business Days of such receipt, make payment in respect of the Loans with Available Cash Received that does not constitute Cargill Designated Funds.

(b) Upon the full satisfaction of the Cargill Payable pursuant to the Cargill Settlement, the Borrower shall thereafter be obligated to make quarterly interest payments to the Lenders in accordance with the original terms of the Loan Agreement.

(c) Notwithstanding any other provision of this Section 3.01 or elsewhere in this Agreement, the Loans and all accrued interest thereon shall be due and payable on the Maturity Date.

SECTION 3.02.  Interest.  The Lenders acknowledge and agree that, effective as of December 1, 2008, the Interest Rate in respect of the Loans shall be reduced to 5.0% per annum compounded quarterly and will continue to accrue pursuant to the Loan Agreement at such reduced rate until the earlier of the full satisfaction of the

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Cargill Payable pursuant to the Cargill Settlement and the Maturity Date, at which time the interest rate in respect of the Loans shall automatically revert to the original interest rate of 15.0% (or 17.0% with respect to any Event of Default that thereafter occurs or that is otherwise then in existence and not waived by this Agreement) set forth in the Loan Agreement.

SECTION 3.03.  Exercise of Remedies.  The Lenders and the Agent hereby acknowledge and agree that, until the earlier of the full satisfaction of the Cargill Payable pursuant to the Cargill Settlement and the Maturity Date:

(a) No Event of Default shall be deemed to occur as a result of any failure to make payments in respect of the Loans unless an Event of Default as defined in Section 4.01 hereof shall have occurred;

(b) The Borrower’s obligation to pay the Loans and any accrued interest thereon shall only be due upon receipt of and shall only be payable from, Available Cash Received, and at such time shall only be due and payable in an amount equal to the Available Cash Received that does not constitute Cargill Designated Funds attributable to such Available Cash Received; and

(c) Unless an Event of Default shall have occurred and be in effect, the Lenders will not exercise or seek to exercise any rights or remedies (including setoff or recoupment) with respect to the Loans or institute any action or proceeding with respect to such rights or remedies.

ARTICLE IV

Event of Default

SECTION 4.01.  Event of Default.  Until the earlier of the full satisfaction of the Cargill Payable pursuant to the Cargill Settlement and the Maturity Date, an “Event of Default” shall only occur under Section 8.1.1 of the Loan Agreement if the Borrower shall fail to make any payment (a) due pursuant to Section 2.01 or Section 3.01 of this Agreement or (b) due to Cargill pursuant to the Cargill Settlement, in each case within three Business Days of the date such payment becomes due.  Thereafter, an “Event of Default” shall occur under Section 8.1.1 of the Loan Agreement (and any other applicable provisions of the Loan Agreement) pursuant to the original terms of the Loan Agreement (as such terms may hereafter be further amended or modified).  In addition, an Event of Default shall occur under Section 8.1.3 of the Loan Agreement if the Borrower violates Section 6.01 of this Agreement and Section 8.1.3 of the Loan Agreement is hereby amended to be consistent with this sentence.

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ARTICLE V

Representations and Warranties

SECTION 5.01.  Representations and Warranties.  The parties hereby represent and warrant as of the date hereof that (a) each party has full power and authority to execute this Agreement, (b) the execution and delivery by each party of this Agreement has been duly authorized by all necessary action and no other proceedings on the part of such party are necessary to approve this Agreement and (c) each party has duly executed and delivered this Agreement, and this Agreement constitutes a legal, valid and binding obligation of such party, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

SECTION 5.02.  Consent of Required Lenders.  The Lenders hereby represent and warrant that, as of the date hereof, each is the true owner of the Loans as indicated on Schedule A.

ARTICLE VI

Negative Covenants

SECTION 6.01.  Negative Covenant of the Borrower.  Until the earlier of the full satisfaction of the Cargill Payable pursuant to the Cargill Settlement and the Maturity Date, the Borrower shall not agree to any material amendment, modification or waiver to the Cargill Settlement without the prior written consent of the Required Lenders.

ARTICLE VII

Miscellaneous

SECTION 7.01.  Loan Agreement.  This Agreement shall constitute a Loan Document.  Except as specifically stated herein, the provisions of the Loan Agreement are and shall remain in full force and effect and the provisions of Article X of the Loan Agreement shall apply mutatis, mutandis, as appropriate, to this Agreement.

SECTION 7.02.  Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Borrower, the Lenders, the Agent and their respective successors and permitted assigns.

SECTION 7.03.  Headings.  Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or be taken into consideration in interpreting, this Agreement.

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SECTION 7.04.  Counterparts.  This Agreement may be executed in any number of counterparts and/or by facsimile, each of which, shall be deemed to be an original and all of which together shall be deemed to be a single Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

BIOFUEL ENERGY, LLC,
by
	Name:
	Title:
GREENLIGHT APE, LLC,
by
	Name:
	Title:
GREENLIGHT CAPITAL OFFSHORE, LTD.,
by
	Name:
	Title:
GREENLIGHT CAPITAL, L.P.,
by
	Name:
	Title:
GREENLIGHT CAPITAL QUALIFIED, L.P.,
by
	Name:
	Title:

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GREENLIGHT REINSURANCE, LTD.,
by
	Name:
	Title:
THIRD POINT PARTNERS LP,
by
	Name:
	Title:
THIRD POINT PARTNERS QUALIFIED, L.P.,
by
	Name:
	Title:

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Schedule A

Lenders

Lender	Amount of Loans Outstanding ($)
Greenlight Capital, L.P.	1,359,300.40
Greenlight Capital Qualified, L.P.	4,786,556.40
Greenlight Capital Offshore, Ltd.	6,322,123.60
Greenlight Reinsurance, Ltd.	865,352.00
Third Point Partners LP	3,538,615.20
Third Point Partners Qualified, L.P.	2,632,052.40
Daniel S. Loeb	320,000.00
Lawrence J. Bernstein	160,000.00
Todd Q. Swanson	16,000.00

EX-10.2

Exhibit 10.2

EXECUTION VERSION

THIS AGREEMENT (the “Agreement”) is entered into on January 14, 2009, by and between BioFuel Energy, LLC, a Delaware limited liability company (the “Company”), and Cargill, Incorporated, a Delaware corporation (“Cargill”).

RECITALS

WHEREAS, in 2008 the Company and Cargill entered into a number of hedging and fixed-price purchase contracts with respect to corn (the “Contracts”), all of which have been liquidated;

WHEREAS, immediately prior to the Initial Payment (as defined below), the Company owed Cargill $17,402,485.71 (the “Payable”) arising from the liquidated Contracts;

WHEREAS, the Company is also the borrower of indebtedness (together with interest and any other amounts owed in respect thereof, the “Subordinated Debt”) under a loan agreement dated September 25, 2006, among the Company and certain affiliates of Greenlight Capital, Inc. and Third Point LLC (such affiliates, the “Subordinated Debt Holders”); and

WHEREAS, on December 5, 2008, the Company paid Cargill $3,000,000.00 (the “Initial Payment”) in partial satisfaction of the Payable;

NOW, THEREFORE, in consideration of the foregoing, the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I

Definitions and Usage

SECTION 1.01.  Definitions.  In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings:

“Available Cash Received” shall mean:

(a) 100% of the cash proceeds actually received by the Company after the date of this Agreement from its subsidiaries by way of dividend or distribution in compliance with the subsidiaries’ credit facilities, other than (i) any such cash proceeds consisting of management fees paid by such subsidiaries in compliance with their credit facilities (which are currently $800,000.00 per month) and (ii) any other such cash proceeds reasonably required to be spent or reserved by the Company for payment of professional fees, taxes, employee compensation or other similar matters; and

(b) 50% of the cash proceeds actually received by the Company after the date of this Agreement from any Equity Issuance (or cash contribution from holders of Equity Interests) or incurrence of indebtedness for borrowed money, net of all taxes and customary fees, commissions, costs and other expenses incurred in connection therewith.

“Business Day” shall mean a day other than a Saturday, Sunday or legal holiday in the State of New York.

“Cargill Designated Funds” shall mean (i) until the Cash Reallocation Trigger, 100% of Available Cash Received and (ii) thereafter, 50% of Available Cash Received.

“Cash Reallocation Trigger” means the payment by the Company to Cargill after the date hereof of an aggregate of $2,800,828.57 in satisfaction of the Payable pursuant to Article III of this Agreement.

“Equity Issuance” shall mean any issuance or sale by the Company of any Equity Interests thereof, except in each case for (i) any such issuance or sale to its subsidiaries and (ii) any such issuance or sale to management, employees or directors of the Company, BioFuel Energy Corp. or any of the Company’s subsidiaries pursuant to an employee or director stock option or stock purchase plan or an employee or director benefit plan.

“Equity Interests” shall mean shares of capital stock, membership interests or other equity interests, and any option, warrant or other right entitling the holder thereof to purchase or otherwise acquire an equity interest.

ARTICLE II

Initial Actions

SECTION 2.01.  Forgiveness of Payable.  By executing this Agreement, Cargill acknowledges receipt of the Initial Payment and acknowledges and agrees that, subject to Article V hereof,:

(a) effective as of December 1, 2008, it unconditionally and irrevocably forgave, and waived all rights with respect to, $3,000,000.00 of the Payable and any and all interest, fees and other charges associated with the entire amount of the Payable, in each case that accrued or may have accrued through and including November 30, 2008, and as a result of the foregoing, as of December 1, 2008, the remaining amount of the Payable was $11,402,485.71; and

(b) for each additional $1.00 paid by the Company to Cargill after the date of this Agreement pursuant to Section 3.01 hereof up to $2,800,828.57, Cargill shall unconditionally and irrevocably forgive, and waive any and all rights with respect to, (i) an additional $1.00 of the Payable (i.e., $1.00 shall be forgiven in addition to the $1.00 of the Payable that is satisfied as a result of such payment)

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and (ii) any and all accrued interest with respect to the $1.00 forgiven pursuant to sub-clause (i) of this clause (b).

SECTION 2.02.  Interest.  Beginning December 1, 2008, interest on the outstanding Payable began to accrue, and will continue to accrue, at a rate of 5.0% per annum, compounded quarterly.

SECTION 2.03.  Payment to Subordinated Debt Holders.  Cargill acknowledges and agrees that the Company may, at any time after the date hereof, make one or more payments, up to an aggregate amount of $2,000,000.00, in respect of principal, interest or other amounts in respect of the Subordinated Debt, provided that no such payment shall be made unless and until a written agreement between the Company and the Subordinated Debt Holders has been entered into pursuant to which:

(a) the interest rate in respect of the Subordinated Debt is reduced, effective as of December 1, 2008, to 5.0% per annum until the earlier of full satisfaction of the Payable and March 2015, at which time the interest rate in respect of the Subordinated Debt shall automatically revert to the original interest rate payable in respect of the Subordinated Debt;

(b) the Subordinated Debt Holders agree that (i) the Company will not be obligated to make any further cash payments of principal, interest or other amounts in respect of the Subordinated Debt until the Cash Reallocation Trigger has occurred and (ii) from the time of the Cash Reallocation Trigger until the Payable has been fully satisfied pursuant to Article III of this Agreement, the Company will only be obligated to make cash payments to Cargill from the Cargill Designated Funds and will be obligated to make payments in respect of the Subordinated Debt with Available Cash Received that does not constitute Cargill Designated Funds; and

(c) the Subordinated Debt Holders agree that they will not, as a result of or in connection with any failure by the Company to make payments of principal, interest or other amounts in respect of the Subordinated Debt, exercise or seek to exercise any rights or remedies (including setoff or recoupment) with respect to the Subordinated Debt or institute any action or proceeding with respect to such rights or remedies, other than as a result of or in connection with any Event of Default (as defined in Section 4.01 hereof) or any violation of or default under the written agreement contemplated by this Section 2.03.

ARTICLE III

Payments

SECTION 3.01.  Payments to Cargill.  Upon receipt of any Available Cash Received in excess of $100,000.00 (it being understood that Available Cash Received not in excess of such amount shall be included in subsequent calculations of Available Cash Received), the Company will, within two Business Days of such receipt,

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make payment to Cargill in respect of the Payable and/or accrued interest thereon, allocated as set forth in Section 3.02(c) hereof.  Each such payment shall be in an amount equal to the amount of Cargill Designated Funds attributable to such receipt of Available Cash Received.

SECTION 3.02.  Payments Generally.

(a) Cargill acknowledges and agrees that (i) the Company’s obligation to pay the Payable and any accrued interest thereon shall only be due upon receipt of and shall only be payable from, Available Cash Received, and at such time shall only be due and payable in an amount equal to the Cargill Designated Funds attributable to such Available Cash Received, and (ii) unless an Event of Default has occurred, Cargill will not exercise or seek to exercise any rights or remedies (including setoff or recoupment) with respect to the Payable or institute any action or proceeding with respect to such rights or remedies.

(b) All payments to be made in respect of the Payable or accrued interest thereon shall be payable by wire transfer in immediately available funds to the account to which the Initial Payment was paid or to such other account as may be designated by Cargill in advance of any such payment.

(c) Until an aggregate amount of $2,800,828.57 has been paid to Cargill pursuant to this Agreement, all payments to Cargill pursuant to this Agreement shall be applied to permanently reduce the Payable.  Thereafter, payments to Cargill pursuant to this Agreement shall be applied (i) first, to accrued and unpaid interest and (ii) second, toward further permanent reduction of the Payable.

ARTICLE IV

Event of Default

SECTION 4.01.  Event of Default Generally.  An “Event of Default” shall only occur if the Company shall fail to make any payment hereunder within two Business Days of the date such payment becomes due.

SECTION 4.02.  Notice of Default.  If an Event of Default shall occur and be continuing, Cargill may by written notice to the Company declare the Payable and all interest accrued thereon to be immediately due and payable.

SECTION 4.03.  Waiver.  No failure by Cargill to exercise any right or remedy consequent upon a breach of this Agreement shall constitute a waiver of any such breach.

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ARTICLE V

Clawback

SECTION 5.01.  Clawback.  In the event that any payment (or portion of any payment) made by the Company with respect to the Payable is recovered from Cargill, in whole or in part, as a result of any court order in bankruptcy, insolvency or similar proceeding (whether considered in equity or at law) instituted by or against the Company or any of its affiliates, the entire unpaid amount of the Payable, plus the amount of any payment so recovered from Cargill and any amounts previously forgiven pursuant to Section 2.01(a) or 2.01(b) of this Agreement, shall be due and payable to Cargill.

ARTICLE VI

Covenants

SECTION 6.01.  Distributions.  The Company shall use its commercially reasonable efforts, subject to its prudent business judgment, to cause its operating subsidiaries to distribute on a quarterly basis all amounts permitted to be distributed to it under the subsidiaries’ credit facilities.

SECTION 6.02.  Other Agreements.  The Company and Cargill agree to engage promptly in good faith negotiations with respect to a mutually agreeable restructuring of the outstanding silo leases and corn supply agreements between the two parties.  During negotiations, the following matters will be considered by the parties: (i) Cargill’s repayment of the Company’s and its subsidiaries’ investment in the silos, (ii) a reduction in the Company’s and its subsidiaries’ need for working capital in return for a higher per bushel of corn fee payable to Cargill and (iii) a sharing agreement to cover profitability in Cargill’s corn purchase effort for the Company.  It is the intention of the parties that the Company will be, even on a worst case basis, no worse off on an operating cash flow basis if the contemplated restructuring occurs.

SECTION 6.03.  Inspection of Books and Records.  Cargill shall have the right, upon reasonable written notice and during normal business hours, at its own expense to examine the financial books and records of the Company solely to the extent reasonably necessary to confirm the Company’s compliance with this Agreement, provided, however, that such access shall not apply to any books and records of the Company that is attorney work-product or protected by the attorney-client privilege and such access shall not unreasonably disrupt the normal operations of the Company.  All information obtained during the course of such examination shall be kept confidential and shall not be disclosed by Cargill.

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ARTICLE VII

Miscellaneous

SECTION 7.01.  Representations.  Each party hereby represents and warrants to the other party that (i) such party has full power and authority to execute this Agreement, (ii) the execution and delivery by such party of this Agreement has been duly authorized by all necessary action and no other proceedings on the part of such party are necessary to approve this Agreement and (iii) such party has duly executed and delivered this Agreement, and this Agreement constitutes a legal, valid and binding obligation of such party, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

SECTION 7.02.  Notices.  Any notices and other communications required to be given pursuant to this Agreement shall be delivered by hand, by registered or certified mail, postage prepaid, return receipt requested, by private courier, by facsimile or by telex, as follows:

If to the Company:

BioFuel Energy, LLC

1600 Broadway, Suite 2200

Denver, Colorado 80202

Attention: Kelly G. Maguire

   Vice President and Chief Financial Officer

Fax: (303) 592-8117

with a copy to:

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, New York 10019

Attention: Craig F. Arcella

Fax: (212) 474-3700

If to Cargill:

Cargill AgHorizons

P.O. Box 9300, MS 19

Minneapolis, Minnesota 55440-9300

Attention: Daniel P. Dye

   President

Fax: (952) 742-7313

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SECTION 7.03.  Headings.  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

SECTION 7.04.  Entire Agreement.  This Agreement, and any other document signed by the parties hereto at or after the signing of this Agreement, constitute the complete agreement among the parties concerning the subject matter in such documents and supersede all prior understandings among such parties.

SECTION 7.05.  Counterparts.  This Agreement may be executed in any number of counterparts and/or by facsimile, each of which shall be deemed to be an original and all of which together shall be deemed to be a single agreement.

SECTION 7.06.  Amendments and Waiver.  No provision of this Agreement may be amended, modified, waived or discharged unless such amendment, modification, waiver or discharge is agreed to in writing and signed by both parties.

SECTION 7.07.  Further Assurances.  Each of the parties shall execute such agreements and documents and take such further actions as may be reasonably required or desirable to carry out the provisions hereof.  The parties shall cooperate with each other so that each such party receives the benefits to the greatest extent possible to which it may be entitled under this Agreement.

SECTION 7.08.  Reservation of Remedies.  Except as described in this Agreement, the rights and remedies of the parties are not exclusive of any rights or remedies which they would otherwise have thereunder or at law or in equity.

SECTION 7.09.  Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.

SECTION 7.10.  Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Company and Cargill and their respective successors and permitted assigns.

SECTION 7.11.  Fees and Expenses.  Each party shall be responsible for its own fees and expenses relating to the execution of this Agreement.

SECTION 7.12.  Waiver of Jury Trial.  The parties hereby waive trial by jury in any action, suit, proceeding or counterclaim of any kind arising out of or related to this Agreement to the full extent permitted by law.

7

IN WITNESS WHEREOF, the Company and Cargill have caused this Agreement to be duly executed as of the day and year first above written.

BIOFUEL ENERGY, LLC,
by
	Name:
	Title:

CARGILL, INCORPORATED,
by
	Name:
	Title:

8

EX-99.1

Exhibit 99.1

NEWS RELEASE

BIOFUEL FINALIZES

PARENT COMPANY DEBT AGREEMENTS

DENVER, COLORADO – January 16, 2009 - BIOFUEL ENERGY CORP. (NASDAQ:BIOF) announced today that it had finalized agreements with each of its parent company creditors’.  The issues arose as a result of hedging losses announced last summer.  All outstanding issues with Cargill and the Company’s subordinated debt holders have now been resolved.  Future payments to Cargill and the subordinated debt holders are contingent on available cash flow, as defined.  Following a $3.0 million payment in early December, the remaining balance due Cargill totaled $11.4 million and interest began accruing at a 5% annual rate.  As part of the agreements, the subordinated debt holders received a $2.0 million payment in January.  The payment retired all unpaid interest and brought the balance to approximately $19.4 million.  Effective December 1, 2008, interest on the subordinated debt began to accrue at a 5% annual rate, a rate that will apply until Cargill has been paid in full.  The subordinated debt previously carried a 15% interest rate.

Simultaneously, the Company announced that it believed its Wood River, Nebraska and Fairmont, Minnesota plants had both achieved project completion by year-end.  Completion is the final step under the Company’s construction contracts and bank financing arrangements.  The facilities ran at 100% of their combined 230 million gallon annual nameplate capacity in December.  The process by which formal approval of Completion by the Company’s bank group has been initiated and approval is expected shortly.  While certain repairs and improvements remain to be completed, the Company’s focus will now turn to reducing costs and enhancing plant efficiency.  Unfortunately, operating margins in the ethanol industry remain weak.

This release contains certain forward-looking statements within the meaning of the Federal securities laws. Such statements are based on management’s current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Factors that could cause actual results to differ from those anticipated are discussed in our Exchange Act filings and our Annual Report on Form 10-K.

BioFuel Energy currently has two 115 million gallons per year ethanol plants in the Midwestern corn belt. The Company’s goal is to become a leading ethanol producer in the United States by acquiring, developing, owning and operating ethanol production facilities.

###

Contact:	Kelly G. Maguire	For more information:
	Vice President - Finance and	www.bfenergy.com
	Chief Financial Officer
	(303) 592-8110
	kmaguire@bfenergy.com

1801 Broadway, Suite 1060· Denver, CO · 303.592.8110 · www.bfenergy.com