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): May 22, 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) 640-6500

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 2.04.Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

On May 26, 2009, BFE Operating Company, LLC, Buffalo Lake Energy, LLC and Pioneer Trail Energy, LLC, which are subsidiaries of BioFuel Energy Corp. (the “Company”) received a Notice of Default dated May 22, 2009 (the “Notice”), under the Credit Agreement dated as of September 25, 2006 (as amended, supplemented and modified from time to time, the “Credit Agreement”), among BFE Operating Company, LLC, Buffalo Lake Energy, LLC, and Pioneer Trail Energy, LLC (collectively, as “Borrowers”), BFE Operating Company, LLC as Borrowers’ Agent, the Lenders party thereto, BNP Paribas, as Administrative Agent and Arranger, and Deutsche Bank Trust Company Americas, as Collateral Agent.

In the Notice, BNP Paribas asserted that the Lenders had determined that a “Material Adverse Effect” (as defined in the Credit Agreement) had occurred with respect to the Borrowers, that the Borrowers were generally unable to pay their debts when due and there occurred certain other events of default.  As a result, the Administrative Agent has asserted that the Borrowers cannot satisfy the conditions precedent to (a) permit additional borrowings under the Credit Agreement or (b) convert the Construction Loans into Term Loans under the Credit Agreement.  The Administrative Agent has also provided notice to the Collateral Agent so as to prevent the Borrowers from having access to its bank accounts.

The Company disagrees with these assertions. The Company and the Borrowers have not failed to make any payments due or payable under the Credit Agreement, or to any other creditors or vendors, and fully expect to meet the interest payment due to the Lenders at the end of May.  The Borrowers have entered into a Limited Consent and Waiver and Amendment with the Lenders pursuant to which they will have immediate access to their bank accounts to pay vendors for corn, natural gas and other materials, while they continue discussions seeking to arrive at a long-term solution to the Company’s liquidity requirements.  The Company has retained a financial advisor to support its ongoing discussions with its lenders.

The above description is only a summary of the assertions made by the Administrative Agent in the Notice and the potential consequences and remedies under the Credit Agreement, and does not purport to be complete.  You are advised to refer to the actual Notice, which is attached to this report as Exhibit 99.1 and incorporated by reference herein, for the full details of the assertions made therein, and to the terms of the Credit Agreement, which has been filed with the SEC as Exhibit 10.2 to the Company’s Amendment #1 to Registration Statement to Form S-1 (file no. 333-139203) on January 24, 2007, for the full details of the terms thereof.

An Event of Default under the Credit Agreement also constitutes an Event of Default under the Loan Agreement dated September 25, 2006 (the “Subordinated Debt”), between the Company, the lenders party thereto, and Greenlight APE, LLC, as administrative agent.  The Company has informed the lenders under the Subordinated Debt of its receipt of the Notice under the Credit Agreement.

Item 9.01.Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Description
10.1	Limited Consent and Waiver and Amendment dated May 28, 2009.
99.1	Letter dated May 22, 2009 addressed to BFE Operating Company, LLC, Buffalo Lake Energy, LLC and Pioneer Trail Energy, LLC.
99.2	Press Release dated May 28, 2009 announcing receipt of the Notice of Default.

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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: May 28, 2009	By:	/s/ Scott Pearce
	Name:	Scott Pearce
	Title:	President and Chief Operating Officer

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Exhibit Index

Exhibit No.	Description
10.1	Limited Consent and Waiver and Amendment dated May 28, 2009.
99.1	Letter dated May 22, 2009 addressed to BFE Operating Company, LLC, Buffalo Lake Energy, LLC and Pioneer Trail Energy, LLC.
99.2	Press Release dated May 28, 2009 announcing receipt of the Notice of Default.

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EX-10.1

Exhibit 10.1

May 28, 2009

BNP Paribas, as Lender and Administrative Agent

787 Seventh Avenue

New York, NY 10019

Deutsche Bank Trust Company Americas, as Collateral Agent and Depositary Agent

60 Wall Street, 27th Floor

Mail Stop: NYC60-2710

New York, NY 10005

The Lender parties to the Credit

Agreement (as defined below)

Re:Limited Consent and Waiver and Amendment under the Credit Agreement and Account Agreement (each as defined below)

Ladies and Gentlemen:

1.This request for limited consent and waiver and amendment (this “Consent”) is delivered to you pursuant to (i) that certain Credit Agreement, dated as of September 25, 2006 (as amended, supplemented and modified from time to time, the “Credit Agreement”), among BFE Operating Company, LLC (“Opco”), Buffalo Lake Energy, LLC (“Buffalo Lake”), Pioneer Trail Energy, LLC (“Pioneer Trail” and, together with Opco and Buffalo Lake, the “Borrowers”), Opco, as Borrowers’ Agent (the “Borrowers’ Agent”), the Lenders party thereto, BNP Paribas, as Administrative Agent and Arranger, and Deutsche Bank Trust Company Americas, as Collateral Agent and (ii) that certain Collateral Account Agreement, dated as of September 25, 2006 (as amended, supplemented and modified from time to time, the “Account Agreement”), among Borrowers, the Borrowers’ Agent, the Collateral Agent, and Deutsche Bank Trust Company Americas, as the Depositary Agent (the “Depositary Agent”).  All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

2.The Borrowers hereby acknowledge having received notice by letter dated May 22, 2009 that: (a) a number of Defaults and Events of Default under the Credit Agreement have occurred and are continuing as of the date hereof; and (b) as a result thereof, the Borrowers cannot satisfy the conditions precedent to borrow funds under the Credit Agreement.

3.Section 6.1(a) of the Account Agreement provides that, on and after the date on which the Depositary Agent has received a notice of an Event of Default (and this Consent constitutes such a notice of an Event of Default pursuant to paragraph 9 of this Consent), the Depositary Agent shall accept all notices and instructions required to be given to the Depositary Agent pursuant to the Account Agreement only from the Collateral Agent (acting on the instructions of the Administrative Agent pursuant to the Credit Agreement) and not from any other Person, and the Depositary Agent shall not withdraw, dispose of, transfer, pay or otherwise distribute any monies in any of the Accounts except pursuant to notices and instructions from the

Collateral Agent (acting on the instructions of the Administrative Agent pursuant to the Credit Agreement).

4.The Borrowers are in immediate need of funds for the purposes and in the amounts specified in Exhibit A and therefore hereby request the Lenders to permit the transfers set forth in paragraph 5 below.

5.Notwithstanding anything to the contrary contained in Section 6.1(c) or any other provision of the Account Agreement but subject to the proviso below in this paragraph, the Collateral Agent (acting on the instructions of the Administrative Agent) hereby instructs the Depositary Agent to not withdraw, dispose of, transfer, pay or otherwise distribute any monies in any of the Accounts except pursuant to Sections 4.2(a)(iv), 4.2(a)(v)(A), 4.2(b), 4.2(d), 4.2(e), 4.3(b), 4.4 and 4.5 of the Account Agreement in accordance with a certificate provided in conformity with the requirements of the Account Agreement for such purpose, unless the Depositary Agent shall have been instructed otherwise in writing by the Collateral Agent (acting on the instructions of the Administrative Agent), in the order of priority set forth in such Sections; provided, however, that the Depository Agent may only make transfers out of the Payment Accounts pursuant to Section 4.3(b) from funds on deposit in the Payment Accounts on the date hereof and solely for the uses and in the amounts specified in Exhibit A.  The foregoing consent and waiver shall expire on May 31, 2009 unless otherwise extended by a written consent of the Required Lenders or terminated earlier by a written notice from the Administrative Agent.

6.Exhibit B hereto sets forth the current balances in each of the Accounts as of the date hereof.

7.The parties hereto agree that Section 4.2(b) of the Account Agreement is hereby amended by replacing “Section 4.2(a)(iii)” appearing in the third line with “Section 4.2(a)(iv)”.

8.Notwithstanding anything provided herein or in the Financing Documents, the Borrowers acknowledge and agree that: (a) the foregoing waivers and instructions provided herein may be modified or revoked at any time upon unilateral notice from the Administrative Agent (acting in its sole discretion), except that the extension of the expiration date of the waiver contained in paragraph 5 above shall require the prior written consent of the Required Lenders; (b) the Construction Budget in effect on the date hereof is hereby suspended for all purposes and the Borrowers may not request a Borrowing in accordance with such Construction Budget unless otherwise approved in writing by the Required Lenders; and (c) the Borrowers may not request any transfers, withdrawals or payments under the Account Agreement except as provided in this Consent.

9.The Collateral Agent and Depositary Agent hereby agree that this Consent shall be deemed to constitute a written “Notice of Default”: (a) from the Lenders pursuant to Section 8.5(b) of the Credit Agreement (in the case of the Collateral Agent) and (b) from the Administrative Agent pursuant to Section 6.1(a) of the Account Agreement (in the case of the Depositary Agent).

10.The Lenders and Agents (collectively the “Lender Parties”) provide this Consent (i) without prejudice to any of the Lender Parties’ rights under the Credit Agreement, the other

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Financing Documents and/or under applicable law, all of which rights and remedies are specifically reserved and (ii) without prejudice to the Borrowers’ continuing obligations under the Credit Agreement, all of which remain in full force and effect.

11.On its own behalf and on behalf of the other Lender Parties, the Administrative Agent hereby expressly reserves all of the Lender Parties’ respective individual and collective rights and remedies under the Credit Agreement, the other Financing Documents and applicable law, including, without limitation, with respect to the existence of any Defaults or Events of Default under the Credit Agreement, and the remedies available under Section 7.2(b) thereof.  The Lender Parties (i) have not waived and do not intend to waive any existing or future Defaults or Events of Default under the Credit Agreement, and (ii) are not obligated in any way, and have not agreed, to “stand still” or in any respect forbear from individually or collectively enforcing rights or remedies under the Credit Agreement, any other Financing Document or under any applicable law, all of which rights and remedies are expressly reserved by the Lender Parties, including the right to exercise any remedies in respect of the Events of Default described hereunder.  No oral communication, course of conduct, past or future forbearance on the part of any of the Lender Parties should be viewed as a limitation upon or waiver of the absolute right and privilege of the Lender Parties in exercising remedies that currently or may in the future exist, and any single or partial exercise of any right or remedy under the Financing Documents shall not preclude any other or further exercise thereof or the exercise of any other right or remedy.

12.Pursuant to Section 9.12(a) of the Credit Agreement, the Lenders hereby authorize and direct the Administrative Agent, the Administrative Agent (acting upon instructions of the Required Lenders) hereby authorizes and directs the Collateral Agent and the Collateral Agent hereby authorizes and directs the Depositary Agent, to execute and deliver this Consent and any other documents which may be reasonably necessary to give effect to this Consent.

13.Except as expressly amended hereby, all terms and conditions contained in the Credit Agreement and all other Financing Documents shall remain unchanged and in full force and effect in accordance with their respective terms.

14.THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

15.This Consent shall become effective as of the date first written above (the “Effective Date”) upon the following conditions having been fully satisfied:  (a) the Required Lenders shall have executed and delivered (including by way of facsimile or electronic “pdf” format) to the Administrative Agent duly executed counterparts of this Consent and (b) the Administrative Agent, the Collateral Agent and the Depositary Agent shall have executed and delivered duly executed counterparts of this Consent.

16.The parties hereto agree that this Consent may be executed in counterparts.

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{signature pages follow}

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IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized, have caused this letter to be duly executed and delivered as of the date first above written.

BFE OPERATING COMPANY, LLC,

as Borrower

By:

Name:

Title:

BUFFALO LAKE ENERGY, LLC,

as Borrower

By:

Name:

Title:

PIONEER TRAIL ENERGY, LLC, as

Borrower

By:

Name:

Title:

BFE OPERATING COMPANY, LLC,

as Borrowers’ Agent

By:

Name:

Title:

Accepted and Agreed:

BNP PARIBAS, as Lender

By:

Name:

Title:

By:

Name:

Title:

STANDARD CHARTERED BANK,

as Lender

By:

Name:

Title:

AGFIRST FARM CREDIT BANK,

as Lender

By:

Name:

Title:

FARM CREDIT SERVICES OF AMERICA,

as Lender

By:

Name:

Title:

GREENSTONE FARM CREDIT SERVICES, ACA/FLCA,
as Lender

By:

Name:

Title:

METROPOLITAN LIFE INSURANCE COMPANY, as Lender

By:

Name:

Title:

AMARILLO NATIONAL BANK,

as Lender

By:

Name:

Title:

FARM CREDIT BANK OF TEXAS,

as Lender

By:

Name:

Title:

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK INTERNATIONAL”, NEW YORK BRANCH,

as Lender

By:

Name:

Title:

By:

Name:

Title:

FIRST NATIONAL BANK OF OMAHA,

as Lender

By:

Name:

Title:

CIFC Funding 2006-IB, LTD., as Lender

By:

Name:

Title:

CIFC Funding 2006-II, LTD., as Lender

By:

Name:

Title:

CIFC Funding 2006-III, LTD., as Lender

By:

Name:

Title:

DEUTSCHE BANK TRUST COMPANY

AMERICAS, as Collateral Agent and Depositary Agent

By:

Name:

Title:

By:

Name:

Title:

BNP PARIBAS, as Administrative Agent

By:

Name:

Title:

By:

Name:

Title:

EXHIBIT A TO CONSENT

PERMITTED OPERATION AND MAINTENANCE EXPENSES UNDER CONSENT

EXHIBIT B TO CONSENT

OUTSTANDING BALANCES IN ACCOUNTS

EX-99.1

Exhibit 99.1

May 22, 2009

VIA FACSIMILE

BFE Operating Company, LLC

Buffalo Lake Energy, LLC

Pioneer Trail Energy, LLC

1801 Broadway, Suite 1060

Denver, CO 80202

BFE Operating Company, LLC

Buffalo Lake Energy, LLC

Pioneer Trail Energy, LLC

1625 Broadway, Suite 2400

Denver, CO 80202

Attention: Scott H. Pearce

Re:          Notice of Events of Default

Dear Mr. Pearce:

Reference is hereby made to that certain Credit Agreement, dated as of September 25, 2006 (as amended and supplemented from time to time, the “Credit Agreement”), among BFE Operating Company, LLC (“Opco”), Buffalo Lake Energy, LLC (“Buffalo Lake”) and Pioneer Trail Energy, LLC (“Pioneer Trail” and, collectively with Buffalo Lake and Opco, the “Company”), as Borrowers, Opco, as Borrowers’ Agent, various financial institutions, as lenders (the “Lenders”), Deutsche Bank Trust Company Americas, as Collateral Agent, and BNP Paribas, as Administrative Agent (in such capacity, the “Administrative Agent”) and Arranger. Unless otherwise defined herein, capitalized terms used in this letter shall have the meanings set forth in the Credit Agreement.

We write to inform you that after assessing the Company’s performance, its business, operations prospects and condition, and its ability to timely perform its obligations under the Transaction Documents, the Required Lenders have determined in their judgment that an event, condition or circumstance exists or has occurred which has had or would reasonably be expected to have a Material Adverse Effect. The facts supporting this determination, include, among other things, statements contained in the Form 10-Q filed by Biofuel Energy Corp. on May 15, 2009. We further note that the Company’s cash-flow projections and Biofuel Energy Corp.’s 10-Q demonstrate that the Company is unable to pay its debts as they become due which constitutes an Event of Default. Moreover, as recently as May 20, 2009, the Company certified that no Default or Event of Default shall have occurred or be continuing, which certification constitutes an Event of Default. Furthermore, the Company’s failure to respond to our May 14, 2009 request for additional information constitutes a breach of the covenant contained in Section 5.1(l) of the Credit Agreement and is therefore a Default under Section 7.1(d)(ii) of the Credit Agreement.

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In light of these facts, and without limiting any right the Administrative Agent or the Lenders may have to declare other Defaults or Events of Default, this letter constitutes written notice that Events of Default have occurred and are continuing pursuant to Sections 7.1(c), (f) and (x) of the Credit Agreement. As a result of the occurrence and continuation of these Events of Default, the Company cannot satisfy the conditions precedent to borrow funds under the Credit Agreement. Credit Agreement § 3.3 (c), (e). Likewise, the Company cannot satisfy the conditions precedent, set forth in Section 3.4 of the Credit Agreement, required to convert the Construction Loans to Term Loans. As the Company cannot satisfy the conditions precedent to conversion, the Construction Loans cannot be converted to Term Loans as provided in Section 2.2 of the Credit Agreement. Accordingly, the Administrative Agent cannot take the actions necessary to achieve the Conversion Date as requested in your letter of May 12, 2009.

We provide this notice (i) without prejudice to any of the Administrative Agent’s, Lenders’ or other Agents’ (collectively, the “Lender Parties”) rights under the Credit Agreement, the other Financing Documents and/or under applicable law, all of which rights and remedies are specifically reserved and (ii) without prejudice to the Company’s continuing obligations under the Credit Agreement, all of which remain in full force and effect.

On its own behalf and on behalf of the other Lender Parties, the Administrative Agent hereby expressly reserves all of the Lender Parties’ respective individual and collective rights and remedies under the Credit Agreement, the other Financing Documents and applicable law, including, without limitation, with respect to the existence of any other Defaults or Events of Default under the Credit Agreement, and the remedies available under Section 7.2 (b) thereof. The Lender Parties (i) have not waived and do not intend to waive any existing or future Defaults or Events of Default under the Credit Agreement and (ii) are not obligated in any way, and have not agreed, to “stand still” or in any respect forbear from individually or collectively enforcing rights or remedies under the Credit Agreement, any other Financing Document or under any applicable law, all of which rights and remedies are expressly reserved by the Lender Parties, including the right to exercise any remedies in respect of these Events of Default. No past or future forbearance on the part of any of the Lender Parties should be viewed as a limitation upon or waiver of the absolute right and privilege of the Lender Parties in exercising remedies that currently or may in the future exist, and any single or partial exercise of any right or remedy under the Financing Documents shall not preclude any other or further exercise thereof or the exercise of any other right or remedy.

No oral communication from or on behalf of any Lender Party to any party shall constitute an agreement, commitment or evidence of any assurance or intention of any of such entities with respect to the subject matter hereof or of the Financing Documents. Any agreement, commitment, assurance or intention of any Lender Party shall be effective only if in writing and duly executed on behalf of such Lender Party in accordance with the requirements of Section 9.12 of the Credit Agreement.

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THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ITS CHOICE OR CONFLICTS OF LAW RULES).

Very truly yours,
BNP PARIBAS,
as Administrative Agent and Arranger
By:	/s/ Timothy Chin
Name:	Timothy Chin
Title:	Director

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EX-99.2

Exhibit 99.2

 

NEWS RELEASE

BIOFUEL RECEIVES NOTICE OF DEFAULT

FROM LENDERS

DENVER, COLORADO — May 28, 2009 — BIOFUEL ENERGY CORP. (NASDAQ:BIOF) announced today that it has received a Notice of Default from its syndicate of lenders, led by BNP Paribas, as Administrative Agent, under its senior bank facility.  The Company reported that the banks have asserted that a “Material Adverse Effect” had occurred with respect to the Company, even though it has not missed any payments owed under the facility, or to any other creditors or vendors, and expects to meet the interest payment due at the end of May.  The Company has entered into a Limited Consent and Waiver and Amendment with its lenders, which will allow the Company to have immediate access to its bank accounts to pay vendors for corn, natural gas and other materials while they continue to pursue a longer-term solution to its liquidity issues.  The Company also announced it has retained a financial advisor to support its ongoing discussions with its lenders.

Scott H. Pearce, President and CEO, stated: “While we understand the banks’ concerns regarding the state of the ethanol industry and the Company’s financial condition, we are disappointed that BNP Paribas and the other banks felt it necessary to take this action.  However, despite this action, we expect to have access to our bank accounts in order to continue funding our day-to-day operations as we work with the lenders and our advisors to reach a longer-term arrangement.”

Based on recent spot margins, the Company expects to operate at or around cash breakeven in the second quarter prior to debt service payments.  As previously disclosed, the Company’s ability to pay debt service or to achieve profitability will depend on improved industry margins.  In the meantime, should the lenders delay or prevent the Company from gaining access to funds necessary to continue operations or accelerate the loans as a result of the events of default asserted in the Notice of Default, the Company may have to curtail or cease its operations, which would likely result in its inability to continue as a going concern and could force it to seek relief from creditors through a filing under the U.S. Bankruptcy Code.

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 Corp. owns and operates two 115 million gallons per year ethanol plants in the Midwestern corn belt

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

1600 Broadway, Suite 2200• Denver, CO • 303.640.6500 •  www.bfenergy.com