10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to

Commission file number: 001-33530

BIOFUEL ENERGY CORP.

(Exact name of registrant as specified in its charter)

Delaware	20-5952523
(State of incorporation)	(I.R.S. employer identification number)

1600 Broadway, Suite 2200 Denver, Colorado	80202
(Address of principal executive offices)	(Zip Code)

(303) 640-6500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Number of shares of Common Stock outstanding as of May 7, 2013: 5,443,292 exclusive of 40,481 shares held in treasury.

PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying interim unaudited condensed consolidated financial statements of BioFuel Energy Corp. (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America.  The statements are unaudited but reflect all adjustments which, in the opinion of management, are necessary to fairly present the Company’s financial position and results of operations. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results for the full year.  For further information, refer to the financial statements and notes presented in the Company’s Annual Report on Form 10-K for the twelve months ended December 31, 2012 (filed with the Securities and Exchange Commission on April 1, 2013).

2

BioFuel Energy Corp.

Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

	March 31, 2013			December 31, 2012
Assets
Current assets
Cash and cash equivalents	$	9,615		$	9,323
Accounts receivable		15,546			9,256
Inventories		12,040			13,443
Deposits		3,074			3,074
Prepaid expenses		954			882
Other current assets		23			78
Total current assets		41,252			36,056
Property, plant and equipment, net		203,299			209,645
Debt issuance costs, net		1,490			1,739
Other assets		2,983			2,983
Total assets	$	249,024		$	250,423
Liabilities and equity
Current liabilities
Accounts payable	$	13,785		$	11,638
Current portion of long-term debt		170,635			170,634
Current portion of tax increment financing		399			399
Other current liabilities		4,117			2,500
Total current liabilities		188,936			185,171
Long-term debt, net of current portion		2,766			2,795
Tax increment financing, net of current portion		4,275			4,275
Other non-current liabilities		3,006			3,072
Total liabilities		198,983			195,313
Commitments and contingencies
Equity
BioFuel Energy Corp. stockholders’ equity
Preferred stock, $0.01 par value; 5,000,000 shares authorized and no shares outstanding at March 31, 2013 and December 31, 2012		—			—
Common stock, $0.01 par value; 10,000,000 shares authorized and 5,483,773 shares outstanding at March 31, 2013 and December 31, 2012		54			54
Class B common stock, $0.01 par value; 3,750,000 shares authorized and 795,479 shares outstanding at March 31, 2013 and December 31, 2012		8			8
Less common stock held in treasury, at cost, 40,481 shares at March 31, 2013 and December 31, 2012		(4,316	)		(4,316	)
Additional paid-in capital		189,863			189,604
Accumulated deficit		(133,755	)		(129,120	)
Total BioFuel Energy Corp. stockholders’ equity		51,854			56,230
Noncontrolling interest		(1,813	)		(1,120	)
Total equity		50,041			55,110
Total liabilities and equity	$	249,024		$	250,423

The accompanying notes are an integral part of these consolidated financial statements.

3

BioFuel Energy Corp.

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Net sales	$	89,041		$	139,413
Cost of goods sold		90,912			145,933
Gross loss		(1,871	)		(6,520	)
General and administrative expenses:
Compensation expense		1,310			1,804
Other		1,721			931
Operating loss		(4,902	)		(9,255	)
Other income (expense):
Other income		1,459			—
Interest expense		(1,885	)		(1,838	)
Loss before income taxes		(5,328	)		(11,093	)
Income tax provision (benefit)		—			—
Net loss		(5,328	)		(11,093	)
Less: Net loss attributable to the noncontrolling interest		693			1,685
Net loss attributable to BioFuel Energy Corp. common stockholders	$	(4,635	)	$	(9,408	)
Loss per share – basic and diluted attributable to BioFuel Energy Corp. common stockholders	$	(0.87	)	$	(1.83	)
Weighted average shares outstanding – basic and diluted		5,308			5,140

The accompanying notes are an integral part of these consolidated financial statements.

4

BioFuel Energy Corp.

Consolidated Statement of Changes in Equity

(in thousands, except share data)

 (Unaudited)

	Common Stock				Class B Common Stock						Treasury Stock			Additional Paid-in Capital		Accumulated Deficit			Total BioFuel Energy Corp. Stockholders’ Equity			Noncontrolling Interest			Total Equity
	Shares		Amount		Shares			Amount
Balance at December 31, 2011		5,270,848	$	53		931,154		$	9		$	(4,316	)	$	187,841	$	(89,277	)	$	94,310		$	5,632		$	99,942
Stock-based compensation		—		—		—			—			—			1,490		—			1,490			—			1,490
Exchange of Class B shares to common		135,675		1		(135,675	)		(1	)		—			273		—			273			(273	)		—
Issuance of restricted stock, (net of forfeitures)		77,250		—		—			—			—			—		—			—			—			—
Net loss		—		—		—			—			—			—		(39,843	)		(39,843	)		(6,479	)		(46,322	)
Balance at December 31, 2012		5,483,773		54		795,479			8			(4,316	)		189,604		(129,120	)		56,230			(1,120	)		55,110
Stock-based compensation		—		—		—			—			—			259		—			259			—			259
Net loss		—		—		—			—			—			—		(4,635	)		(4,635	)		(693	)		(5,328	)
Balance at March 31, 2013		5,483,773	$	54		795,479		$	8		$	(4,316	)	$	189,863	$	(133,755	)	$	51,854		$	(1,813	)	$	50,041

The accompanying notes are an integral part of these consolidated financial statements.

5

BioFuel Energy Corp.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2013			2012
Cash flows from operating activities
Net loss	$	(5,328	)	$	(11,093	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation expense		259			407
Depreciation and amortization		7,090			7,058
Changes in operating assets and liabilities:
Accounts receivable		(6,290	)		(4,740	)
Inventories		1,403			7,279
Prepaid expenses		(72	)		223
Accounts payable		2,151			1,855
Other current liabilities		1,617			(785	)
Other assets and liabilities		(11	)		126
Net cash provided by operating activities		819			330
Cash flows from investing activities
Purchases of property, plant and equipment		(499	)		(581	)
Net cash used in investing activities		(499	)		(581	)
Cash flows from financing activities
Repayment of debt		—			(3,150	)
Repayment of notes payable and capital leases		(28	)		(51	)
Net cash used in financing activities		(28	)		(3,201	)
Net increase (decrease) in cash and cash equivalents		292			(3,452	)
Cash and cash equivalents, beginning of period		9,323			15,139
Cash and cash equivalents, end of period	$	9,615		$	11,687
Cash paid for interest	$	104		$	1,565
Non-cash investing and financing activities:
Additions to property, plant and equipment unpaid during period	$	—		$	48

The accompanying notes are an integral part of these consolidated financial statements.

6

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization, Nature of Business, Basis of Presentation, Liquidity, and Going Concern Considerations

Organization and Nature of Business

BioFuel Energy Corp. (“we” or “the Company”) produces and sells ethanol and its related co-products, primarily distillers grain and corn oil. We have historically operated our two dry-mill ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota. Each of these plants has an undenatured nameplate production capacity of approximately 110 million gallons per year (“Mmgy”). Our operations are subject to changes in commodity prices, specifically, the price of our main commodity input, corn, relative to the price of our main commodity product, ethanol, which is known in the industry as the “crush spread”. Drought conditions in the American Midwest significantly impacted the 2012 corn crop and caused a significant reduction in the corn yield. This led to an increase in the price of corn and a corresponding narrowing in the crush spread as ethanol prices did not rise sufficiently with rising corn prices, due to an oversupply of ethanol. As a result, in September 2012 the Company decided to idle its Fairmont facility and in February 2013 we reduced staffing at the Fairmont facility. Although crush spreads have improved during the first quarter of 2013, our Fairmont plant remains idle. However, we continue to evaluate the economic viability of restarting our Fairmont facility, including the working capital that would be required to restart.

We were incorporated as a Delaware corporation on April 11, 2006 to invest solely in BioFuel Energy, LLC (the “LLC”), a limited liability company organized on January 25, 2006 to build and operate ethanol production facilities in the Midwestern United States. The Company’s headquarters are located in Denver, Colorado. We are a holding company with no operations of our own, and are the sole managing member of the LLC, which is itself a holding company and indirectly owns all of our operating assets. As the sole managing member of the LLC, the Company operates and controls all of the business and affairs of the LLC and its subsidiaries. The Company’s ethanol plants are owned and operated by the operating subsidiaries of the LLC (the “Operating Subsidiaries”). Those Operating Subsidiaries are party to a Credit Agreement (the “Senior Debt Facility”) with a group of lenders, for which First National Bank of Omaha acts as Administrative Agent, and substantially all of the assets of the Operating Subsidiaries are pledged as collateral under the Senior Debt Facility. Neither the Company nor the LLC is a party, either as borrower or guarantor, under the Senior Debt Facility, and none of their respective assets, other than the LLC interests in the Operating Subsidiaries themselves, are pledged as collateral under the Senior Debt Facility. The aggregate book value of the assets of the LLC at March 31, 2013 and December 31, 2012 was $258.1 million and $259.7 million, respectively.

We work closely with Cargill, one of the world’s leading agribusiness companies, with whom we have an extensive commercial relationship. At each of our plant locations, Cargill has a local grain origination presence and owns adjacent grain storage and handling facilities, which we lease from them. Cargill provides corn procurement services, markets the ethanol we produce and provides transportation logistics for our two plants under long-term contracts.

On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty. The Company also split the number of authorized shares of common stock at a ratio of one-for-fourteen, thereby reducing the aggregate number of authorized common stock shares to 10,000,000, and also split the number of authorized shares of Class B common stock at a ratio of one-for-twenty, thereby reducing the aggregate number of authorized Class B common stock shares to 3,750,000. All share and per share information and all necessary par value equity adjustments have been retroactively restated in the financial statements to reflect the effect of this reverse stock split.

At March 31, 2013, the Company owned 87.3% of the LLC membership units with the remaining 12.7% owned by an individual and by certain investment funds affiliated with one of the original equity investors of the LLC. The Class B common shares of the Company are held by the same individual and investment funds who held 795,479 membership units in the LLC as of March 31, 2013 that, together with the corresponding Class B shares, can be exchanged for newly issued shares of common stock of the Company on a one-for-one basis. The proportionate value of the LLC membership units held by the individual or investment funds other than the Company are recorded as noncontrolling interest on the consolidated balance sheets. Holders of shares of Class B common stock have no economic rights but are entitled to one vote for each share held. Shares of Class B common stock are retired upon exchange of the related membership units in the LLC. 

7

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization, Nature of Business, Basis of Presentation, Liquidity, and Going Concern Considerations – (continued)

Basis of Presentation, Liquidity, and Going Concern Considerations

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern. Our financial results and cash flows are subject to wide and unpredictable fluctuations in the crush spread. The price of our main co-product, distillers grain, is likewise subject to wide, unpredictable fluctuations, typically in conjunction with changes in the price of corn. The prices of these commodities are volatile and beyond our control. As a result of the volatility of the prices for these and other items, our results fluctuate substantially and in ways that are largely beyond our control. As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $5.3 million during the three months ended March 31, 2013.

Narrow commodity margins present a significant risk to our cash flows and liquidity. We have had, and continue to have, limited liquidity, with $9.6 million of cash and cash equivalents as of March 31, 2013, of which $8.3 million was held at the LLC and $1.3 million was held at the Operating Subsidiaries, which is subject to the lenders’ liens under the Senior Debt Facility. The Operating Subsidiaries have also relied upon extensions of payment terms by Cargill as an additional source of liquidity and working capital. As of March 31, 2013 the Operating Subsidiaries owed Cargill $10.6 million for accounts payable related to corn purchases. Pursuant to an arrangement with Cargill, the Operating Subsidiaries have been permitted to extend corn payment terms beyond the $10.0 million contractual limit so long as the amounts Cargill owes the Operating Subsidiaries for ethanol exceed the accounts payable balance by an amount that is satisfactory to Cargill. This arrangement may be terminated at any time on little or no notice, in which case the Operating Subsidiaries would need to use cash on hand or other sources of liquidity, if available, to fund their operations.

Due to our limited and declining liquidity, our Board of Directors determined that, in order to preserve cash at the LLC, the Operating Subsidiaries would not make the regularly-scheduled payments of principal and interest that were due under the outstanding Senior Debt Facility on September 28, 2012, in an aggregate amount of $3.6 million. As a result, the Operating Subsidiaries received a Notice of Default from First National Bank of Omaha, as Administrative Agent for the lenders under the Senior Debt Facility. Since the initial default, the Operating Subsidiaries have not made any of the regularly-scheduled principal and interest payments, which through March 31, 2013 totaled $12.9 million.

On April 11, 2013, the Operating Subsidiaries entered into a definitive agreement (the “Lender Agreement”) with First National Bank of Omaha, as Escrow Agent under the Lender Agreement, and as Administrative Agent and Collateral Agent for the lenders under the Senior Debt Facility. Under the terms of the Lender Agreement, the Administrative Agent and the lenders have agreed to provide the Operating Subsidiaries with a grace period until July 30, 2013 to allow the Company to pursue one or more strategic alternatives, including but not limited to a potential sale of one or both of the Company’s ethanol plants. This grace period is subject to the achievement of certain milestones, and may be extended at the sole discretion of the Administrative Agent. The Company has engaged Piper Jaffray & Co. to act as its financial advisor to assist us in exploring these strategic alternatives. In the event of a sale of one or both of our ethanol plants, the proceeds of such sale would first be applied to repay all or a portion of the outstanding indebtedness under the Senior Debt Facility. Residual proceeds after satisfying the senior indebtedness, if any, would accrue to the Company. Any such sale would also most likely require the consent of the lenders under the Senior Debt Facility.

Simultaneously with the execution of the Lender Agreement, the Operating Subsidiaries, the Administrative Agent and the lenders under the Senior Debt Facility also entered into a Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions (the “Deed in Lieu Agreement”), pursuant to which, among other things, the Operating Subsidiaries have agreed to transfer ownership of their respective ethanol plants, including the underlying real property, personal property and all material contracts used to operate the plants, to certain designees of the Administrative Agent and the lenders (“Newco”), in full satisfaction of all outstanding obligations under the Senior Debt Facility and in lieu of the Administrative Agent and the lenders exercising their rights and remedies under the Senior Debt Facility. The Company has made a contingent payment into escrow of $938,000 for the anticipated payment of certain obligations and liabilities of the Operating Subsidiaries which are to be paid or assumed by Newco in conjunction with any such transfer. In conjunction with any such transfer, the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

Under the terms of the Lender Agreement, the Deed in Lieu Agreement is to be held in escrow by the Escrow Agent until the earlier of such time as the Company and its Operating Subsidiaries have completed their pursuit of the strategic alternatives described above or July 30, 2013, unless otherwise extended by the Administrative Agent. 

8

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization, Nature of Business, Basis of Presentation, Liquidity, and Going Concern Considerations – (continued)

Although the Company intends to diligently explore and pursue any number of strategic alternatives, we cannot assure you that it will be able to do so on terms acceptable to the Company or to the lenders under the Senior Debt Facility, if at all. In addition, in either the case of a transfer of the assets of the Operating Subsidiaries to the lenders under the Senior Debt Facility or a sale of one or both of our plants, as discussed above, we cannot assure you as to what value, if any, may be derived for shareholders of the Company from such transfer or sale.

As of March 31, 2013, the Operating Subsidiaries had $170.5 million of principal indebtedness outstanding under the Senior Debt Facility. The entire amount outstanding under the Senior Debt Facility has been classified as a current liability in the March 31, 2013 consolidated balance sheet. 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the default of our Operating Subsidiaries under the Senior Debt Facility, the cessation of operations at the Fairmont ethanol facility, and our limited liquidity all raise substantial doubt about the Company’s ability to do so. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

Principles of Consolidation and Noncontrolling Interest

The accompanying consolidated financial statements include the Company, the LLC and its wholly-owned subsidiaries: BFE Holdings, LLC; BFE Operating Company, LLC; Buffalo Lake Energy, LLC; and Pioneer Trail Energy, LLC. All inter-company balances and transactions have been eliminated in consolidation. The Company treats all exchanges of LLC membership units for Company common stock as equity transactions, with any difference between the fair value of the Company’s common stock and the amount by which the noncontrolling interest is adjusted being recognized in equity.

Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures in the accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company sells its ethanol, distillers grain and corn oil products under the terms of marketing agreements. Revenue is recognized when risk of loss and title transfers upon shipment of ethanol, distillers grain or corn oil. In accordance with our marketing agreements, the Company records its revenues based on the amounts payable to us at the time of our sales of ethanol, distillers grain or corn oil. For our ethanol that is sold within the United States, the amount payable is equal to the average delivered price per gallon received by the marketing pool from Cargill’s customers, less average transportation and storage charges incurred by Cargill, and less a commission. We also sell a portion of our ethanol production to Cargill for export, which sales are shipped undenatured and are excluded from the marketing pool. For exported ethanol sales, the amount payable is equal to the contracted delivered price per gallon, less transportation and storage charges, and less a commission. The amount payable for distillers grain and corn oil is generally equal to the market price at the time of sale less a commission.

9

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

2. Summary of Significant Accounting Policies – (continued)

Cost of goods sold

Cost of goods sold primarily includes costs of materials (primarily corn, natural gas, chemicals and denaturant), electricity, purchasing and receiving costs, inspection costs, shipping costs, lease costs, plant management, certain compensation costs and general facility overhead charges, including depreciation expense.

General and administrative expenses

General and administrative expenses consist of salaries and benefits paid to our management and administrative employees, expenses relating to third party services, travel, office rent, marketing and other expenses, including certain expenses associated with being a public company, such as fees paid to our independent auditors associated with our annual audit and quarterly reviews, directors’ fees, and listing and transfer agent fees.

Cash and Cash Equivalents

Cash and cash equivalents include highly-liquid investments with an original maturity of three months or less. Cash equivalents are currently comprised of money market mutual funds. At March 31, 2013, we had $9.6 million held at three financial institutions, which is in excess of FDIC insurance limits.

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. The Company does not charge interest for any past due accounts receivable. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction to bad debt expense when received. As of March 31, 2013 and December 31, 2012, no allowance was considered necessary.

Concentrations of Credit Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk, whether on- or off-balance sheet, that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.

During the three months ended March 31, 2013 and 2012, the Operating Subsidiaries recorded sales to Cargill representing 73% and 78%, respectively, of total net sales. As of March 31, 2013 and December 31, 2012, the LLC, through its subsidiaries, had receivables from Cargill of $13.9 million and $7.5 million, respectively, representing 89% and 81% of total accounts receivable, respectively.

The Operating Subsidiaries purchase corn, its largest cost component in producing ethanol, from Cargill. During the three months ended March 31, 2013 and 2012, corn purchases from Cargill totaled $70.4 million and $111.8 million, respectively. As of March 31, 2013 and December 31, 2012, the LLC, through its subsidiaries, had payables to Cargill of $10.6 million and $9.0 million, respectively, related to corn purchases.

10

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

2. Summary of Significant Accounting Policies – (continued)

Inventories

Raw materials inventories, which consist primarily of corn, denaturant, supplies and chemicals, and work in process inventories are valued at the lower-of-cost-or-market, with cost determined on a first-in, first-out basis. Finished goods inventories consist of ethanol and distillers grain and are stated at lower of average cost or market.

A summary of inventories is as follows (in thousands):

	March 31, 2013		December 31, 2012
Raw materials	$	6,888	$	8,198
Work in process		3,239		2,831
Finished goods		1,913		2,414
	$	12,040	$	13,443

Derivative Instruments and Hedging Activities

Derivatives are recognized on the balance sheet at their fair value and are included in the accompanying balance sheets as “derivative financial instruments”. On the date the derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge). Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income, net of tax effect, until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable rate asset or liability are recorded in earnings). Changes in the fair value of undesignated derivative instruments or derivatives that do not qualify for hedge accounting are recognized in current period operations.

Accounting guidance for derivatives requires a company to evaluate contracts to determine whether the contracts are derivatives. Certain contracts that meet the definition of a derivative may be exempted as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. The Company’s contracts for corn and natural gas purchases and ethanol sales that meet these requirements and are designated as either normal purchase or normal sale contracts are exempted from the derivative accounting and reporting requirements.

11

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

2. Summary of Significant Accounting Policies – (continued)

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. All costs related to purchasing and developing land or the engineering, design and construction of a plant are capitalized. Maintenance, repairs and minor replacements are charged to operating expenses while major replacements and improvements are capitalized. Depreciation is computed by the straight line method over the following estimated useful lives:

	Years
Land improvements	20 – 30
Buildings and improvements	7 – 40
Machinery and equipment:
Railroad equipment	20 – 39
Facility equipment	20 – 39
Other	5 – 7
Office furniture and equipment	3 – 10

Debt Issuance Costs

Debt issuance costs are stated at cost, less accumulated amortization. Debt issuance costs included in noncurrent assets at March 31, 2013 and December 31, 2012 represent costs incurred related to the Operating Subsidiaries Senior Debt Facility and tax increment financing agreements. These costs are being amortized, using an effective interest method, through interest expense over the term of the related debt. Estimated future debt issuance cost amortization as of March 31, 2013 is as follows (in thousands):

Remainder of 2013	$	729
2014		704
2015		8
2016		8
2017		8
Thereafter		33
Total	$	1,490

12

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

2. Summary of Significant Accounting Policies – (continued)

Impairment of Long-Lived Assets

The Company has two asset groups, its ethanol facility in Fairmont and its ethanol facility in Wood River, which are evaluated separately when considering whether the carrying value of these assets has been impaired. The Company continually monitors whether or not events or circumstances exist that would warrant impairment testing of its long-lived assets. In evaluating whether impairment testing should be performed, the Company considers several factors including the carrying value of the long-lived assets, projected production volumes at its facilities, projected ethanol and distillers grain prices that we expect to receive, and projected corn and natural gas costs we expect to incur. In the ethanol industry, operating margins, and consequently undiscounted future cash flows, are primarily driven by the crush spread. In the event that the crush spread is sufficiently depressed to result in negative operating cash flow at its facilities for an extended time period, the Company will evaluate whether an impairment of its long-lived assets may have occurred.

Recoverability is measured by comparing the carrying value of an asset with estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved, quoted market prices or appraised values, depending on the nature of the assets. As of March 31, 2013, the Company performed an impairment evaluation of the recoverability of its long-lived assets due to marginal crush spreads. As a result of the impairment evaluation, it was determined that the future cash flows from the assets exceeded the carrying values, and therefore no further analysis was necessary and no impairment was recorded.

Stock-Based Compensation

Expense associated with stock-based awards and other forms of equity compensation is based on fair value at grant and recognized on a straight line basis in the financial statements over the requisite service period for those awards that are expected to vest.

Asset Retirement Obligations

Asset retirement obligations are recognized when a contractual or legal obligation exists and a reasonable estimate of the amount can be made. Changes to the asset retirement obligation resulting from revisions to the timing or the amount of the original undiscounted cash flow estimates shall be recognized as an increase or decrease to both the carrying amount of the asset retirement obligation and the related asset retirement cost capitalized as part of the related property, plant and equipment. At March 31, 2013, the Operating Subsidiaries had accrued asset retirement obligation liabilities of $151,000 and $190,000 for its plants at Wood River and Fairmont, respectively. At December 31, 2012, the Operating Subsidiaries had accrued asset retirement obligation liabilities of $149,000 and $188,000 for its plants at Wood River and Fairmont, respectively.

The asset retirement obligations accrued for Wood River relate to the obligations in our contracts with Cargill and Union Pacific Railroad (“Union Pacific”). According to the grain elevator lease with Cargill, the equipment that is adjacent to the grain elevator may be required at Cargill’s discretion to be removed at the end of the lease. In addition, according to the contract with Union Pacific, the buildings that are built near their land in Wood River may be required at Union Pacific’s request to be removed at the end of our contract with them. The asset retirement obligations accrued for Fairmont relate to the obligations in our contracts with Cargill and in our water permit issued by the state of Minnesota. According to the grain elevator lease with Cargill, the equipment that is adjacent to the grain elevator being leased may be required at Cargill’s discretion to be removed at the end of the lease. In addition, the water permit in Fairmont requires that we secure all above ground storage tanks whenever we discontinue the use of our equipment for an extended period of time in Fairmont. The estimated costs of these obligations have been accrued at the current net present value of these obligations at the end of an estimated 20 year life for each of the plants. These liabilities have corresponding assets recorded in property, plant and equipment, which are being depreciated over 20 years.

13

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

2. Summary of Significant Accounting Policies – (continued)  

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company regularly reviews historical and anticipated future pre-tax results of operations to determine whether the Company will be able to realize the benefit of its deferred tax assets. A valuation allowance is required to reduce the potential deferred tax asset when it is more likely than not that all or some portion of the potential deferred tax asset will not be realized due to the lack of sufficient taxable income. The Company establishes reserves for uncertain tax positions that reflect its best estimate of deductions and credits that may not be sustained on a more likely than not basis. As the Company has incurred tax losses since its inception and expects to continue to incur tax losses for the foreseeable future, we will continue to provide a valuation allowance against deferred tax assets until the Company believes that such assets will be realized. The Company includes interest on tax deficiencies and income tax penalties in the provision for income taxes.

Fair Value of Financial Instruments

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. Any derivative financial instruments are carried at fair value. The fair value of the Company’s capital lease and notes payable are not materially different from their carrying amounts based on anticipated interest rates that management believes would currently be available to the Company for similar issues of debt, taking into account the current credit risk of the Company and other market factors. The fair value of the Operating Subsidiaries senior debt, based on an anticipated interest rate of 12%, is estimated to be approximately $155.3 million.

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance. Each of our plants is considered its own unique operating segment under these criteria. However, when two or more operating segments have similar economic characteristics, accounting guidance allows for them to be aggregated into a single operating segment for purposes of financial reporting. Our two plants are very similar in all characteristics and accordingly, the Company presents a single reportable segment, the manufacture of fuel-grade ethanol and the co-products of the ethanol production process.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

14

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

3. Property, Plant and Equipment

Property, plant and equipment, stated at cost, consist of the following at March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013			December 31, 2012
Land and land improvements	$	19,643		$	19,643
Buildings and improvements		49,838			49,838
Machinery and equipment		250,082			250,042
Office furniture and equipment		6,493			6,493
Construction in progress		752			297
		326,808			326,313
Accumulated depreciation		(123,509	)		(116,668	)
Property, plant and equipment, net	$	203,299		$	209,645

Depreciation expense related to property, plant and equipment was $6,841,000 and $6,797,000 for the three months ended March 31, 2013 and 2012, respectively.

4. Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share are calculated using the treasury stock method and includes the effect of all dilutive securities, including stock options, restricted stock and Class B common shares. For those periods in which the Company incurred a net loss, the inclusion of the potentially dilutive shares in the computation of diluted weighted average shares outstanding would have been anti-dilutive to the Company’s loss per share, and, accordingly, all potentially dilutive shares have been excluded from the computation of diluted weighted average shares outstanding in those periods.

On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty. All share and per share information in these financial statements has been retroactively restated to reflect the effect of this reverse stock split.

For the three months ended March 31, 2013 and 2012, 69,349 shares and 72,906 shares, respectively, issuable upon the exercise of stock options were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive.

A summary of the reconciliation of basic weighted average shares outstanding to diluted weighted average shares outstanding follows:

	Three Months Ended March 31,
	2013			2012
Weighted average common shares outstanding – basic		5,308,161			5,139,590
Potentially dilutive common stock equivalents
Class B common shares		795,479			931,148
Restricted stock		135,131			103,826
		930,610			1,034,974
		6,238,771			6,174,564
Less anti-dilutive common stock equivalents		(930,610	)		(1,034,974	)
Weighted average common shares outstanding – diluted		5,308,161			5,139,590

15

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

5. Long-Term Debt

The following table summarizes long-term debt as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013			December 31, 2012
Term loans	$	170,480		$	170,480
Capital lease		2,472			2,475
Notes payable		449			474
		173,401			173,429
Less current portion		(170,635	)		(170,634	)
Long-term portion	$	2,766		$	2,795

Senior Debt Facility

In September 2006, the Operating Subsidiaries entered into the Senior Debt Facility to finance the construction of and provide working capital to operate our ethanol plants. Neither the Company nor the LLC is a borrower or a guarantor under the Senior Debt Facility, although the equity interests and assets of our subsidiaries are pledged as collateral to secure the debt under the facility. Principal payments under the Senior Debt Facility are payable quarterly at a minimum amount of $3,150,000, with additional pre-payments to be made out of available cash flow. These term loans mature in September 2014.

The Operating Subsidiaries did not make the regularly-scheduled payments of principal and interest that were due under the outstanding Senior Debt Facility on September 28, 2012, in an aggregate amount of $3.6 million. As a result, the Operating Subsidiaries received a Notice of Default from First National Bank of Omaha, as Administrative Agent for the lenders under the Senior Debt Facility. Since the initial default the Operating Subsidiaries have not made any of the regularly-scheduled principal and interest payments, which through March 31, 2013 totaled $12.9 million.

On April 11, 2013, the Operating Subsidiaries entered into a Lender Agreement with First National Bank of Omaha, as Escrow Agent under the Lender Agreement, and as Administrative Agent and Collateral Agent for the lenders under the Senior Debt Facility. Under the terms of the Lender Agreement, the Administrative Agent and the lenders have agreed to provide the Operating Subsidiaries with a grace period until July 30, 2013 to allow the Company to pursue one or more strategic alternatives, including but not limited to a potential sale of one or both of the Company’s ethanol plants. This grace period is subject to the achievement of certain milestones, and may be extended at the sole discretion of the Administrative Agent. The Company has engaged Piper Jaffray & Co. to act as its financial advisor to assist us in exploring these strategic alternatives.

Simultaneously with the execution of the Lender Agreement, the Operating Subsidiaries, the Administrative Agent and the lenders under the Senior Debt Facility also entered into a Deed in Lieu Agreement, pursuant to which, among other things, the Operating Subsidiaries have agreed to transfer ownership of their respective ethanol plants, including the underlying real property, personal property and all material contracts used to operate the plants, to Newco, in full satisfaction of all outstanding obligations under the Senior Debt Facility and in lieu of the Administrative Agent and the lenders exercising their rights and remedies under the Senior Debt Facility. The Company has made a contingent payment into escrow of $938,000 for the anticipated payment of certain obligations and liabilities of the Operating Subsidiaries which are to be paid or assumed by Newco in conjunction with any such transfer. In conjunction with any such transfer, the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

Under the terms of the Lender Agreement, the Deed in Lieu Agreement is to be held in escrow by the Escrow Agent until the earlier of such time as the Company and its Operating Subsidiaries have completed their pursuit of the strategic alternatives described above or July 30, 2013, unless otherwise extended by the Administrative Agent.

As of March 31, 2013, the Operating Subsidiaries had $170.5 million of principal indebtedness outstanding under the Senior Debt Facility. The entire amount outstanding under the Senior Debt Facility has been classified as a current liability in the March 31, 2013 consolidated balance sheet.

Interest rates on the Senior Debt Facility are, at management’s option, set at: i) a base rate, which is the higher of the federal funds rate plus 0.5% or the administrative agent’s prime rate, in each case plus a margin of 2.0%; or ii) at LIBOR plus 3.0%. Interest on base rate loans is payable quarterly and, depending on the LIBOR rate elected, as frequently as monthly on LIBOR loans, but no less frequently than quarterly. In addition, since the Operating Subsidiaries defaulted on their payments of principal and interest in September 2012, those unpaid balances have accrued interest at a penalty rate of 8.3%. The interest rate in effect on the borrowings at both March 31, 2013 and December 31, 2012 was 3.2%.

16

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

5. Long-Term Debt – (continued)

The Senior Debt Facility is secured by a first priority lien on all right, title and interest in and to the Wood River and Fairmont plants and any accounts receivable or property associated with those plants and a pledge of all of our equity interests in the Operating Subsidiaries. The Operating Subsidiaries have established collateral deposit accounts maintained by an agent of the banks, into which their revenues are deposited, subject to security interests to secure any outstanding obligations under the Senior Debt Facility. These funds are then allocated into various sweep accounts held by the collateral agent, including accounts that provide funds for the operating expenses of the Operating Subsidiaries. The collateral accounts have various provisions, including historical and prospective debt service coverage ratios and debt service reserve requirements, which determine whether there is, and the amount of, cash available to the LLC from the collateral accounts each month. The terms of the Senior Debt Facility also include covenants that impose certain limitations on, among other things, the ability of the Operating Subsidiaries to incur additional debt, grant liens or encumbrances, declare or pay dividends or distributions, conduct asset sales or other dispositions, merge or consolidate, and conduct transactions with affiliates. The terms of the Senior Debt Facility also include customary events of default including failure to meet payment obligations, failure to pay financial obligations when due, failure of the Operating Subsidiaries to remain solvent and failure to obtain or maintain required governmental approvals. Under the terms of separate management services agreements between our Operating Subsidiaries and the LLC, the Operating Subsidiaries were paying a monthly management fee of $884,000 to the LLC to cover salaries, rent, and other operating expenses of the LLC. Due to the Senior Debt Facility payment default, the lenders required the Operating Subsidiaries to reduce their monthly management fee to $260,000 per month effective October 2012.

Debt issuance fees and expenses of $7.9 million ($1.4 million, net of accumulated amortization as of March 31, 2013) have been incurred in connection with the Senior Debt Facility. These costs have been deferred and are being amortized and expensed as interest over the term of the Senior Debt Facility. 

Capital Lease

The operating subsidiary that constructed the Fairmont plant, has entered into an agreement with the local utility pursuant to which the utility has built and owns and operates a substation and distribution facility in order to supply electricity to the plant. The operating subsidiary is paying a fixed facilities charge based on the cost of the substation and distribution facility of $34,000 per month, over the 30-year term of the agreement. This fixed facilities charge is being accounted for as a capital lease in the accompanying financial statements. The agreement also includes a $25,000 monthly minimum energy charge that also began in the first quarter of 2008.

Notes Payable

Notes payable relate to certain financing agreements in place at our Wood River facility. The operating subsidiary entered into a note payable for $419,000 with the City of Wood River for special assessments related to street, water, and sanitary improvements at our Wood River facility. This note requires ten annual payments of $58,000, including interest at 6.5% per annum, and matures in 2018. In addition, the operating subsidiary for the Wood River facility entered into a financing agreement in the fourth quarter of 2012 for the purchase of certain rolling stock equipment to be used at the facility for $208,000. This note requires 24 monthly payments of $9,000, including interest at 6.0% per annum, and matures in 2014.

The following table summarizes the aggregate maturities of our long-term debt as of March 31, 2013 (in thousands):

Remainder of 2013	$	170,606
2014		146
2015		57
2016		60
2017		66
Thereafter		2,466
Total	$	173,401

17

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

6. Tax Increment Financing

In February 2007, the operating subsidiary that constructed the Wood River plant received $6.0 million from the proceeds of a tax increment revenue note issued by the City of Wood River, Nebraska. The proceeds funded improvements to property owned by the operating subsidiary. The City of Wood River will pay the principal and interest of the note from the incremental increase in the property taxes related to the improvements made to the property. The interest rate on the note is 7.85%. The proceeds have been recorded as a liability which is reduced as the operating subsidiary remits property taxes to the City of Wood River, which began in 2008 and will continue through 2021. The LLC has guaranteed the principal and interest of the tax increment revenue note if, for any reason, the City of Wood River fails to make the required payments to the holder of the note or the operating subsidiary fails to make the required payments to the City of Wood River.

The following table summarizes the aggregate maturities of the tax increment financing debt as of March 31, 2013 (in thousands):

Remainder of 2013	$	399
2014		431
2015		464
2016		501
2017		540
Thereafter		2,339
Total	$	4,674

7. Stockholders’ Equity

 Reverse Stock Split

On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty. The Company also split the number of authorized shares of common stock at a ratio of one-for-fourteen, thereby reducing the aggregate number of authorized common stock shares to 10,000,000, and also split the number of authorized shares of Class B common stock at a ratio of one-for-twenty, thereby reducing the aggregate number of authorized Class B common stock shares to 3,750,000. All share and per share information and all necessary par value adjustments have been retroactively restated in the financial statements to reflect the effect of this reverse stock split.

Stock Repurchase Plan

On October 15, 2007, the Company announced the adoption of a stock repurchase plan authorizing the repurchase of up to $7.5 million of the Company’s common stock. Purchases will be funded out of cash on hand and made from time to time in the open market. From the inception of the buyback program through March 31, 2013, the Company had repurchased 40,481 shares at an average price of $106.62 per share, leaving $3,184,000 available under the repurchase plan. The shares repurchased are being held as treasury stock. As of March 31, 2013, there were no plans to repurchase any additional shares.

Dividends

The Company has not declared any dividends on its common stock and does not anticipate paying dividends in the foreseeable future. In addition, the terms of the Senior Debt facility contain restrictions on the ability of the Operating Subsidiaries of the LLC to pay dividends or other distributions, which will restrict the Company’s ability to pay dividends in the future.

18

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

8. Derivative Financial Instruments

The Company offsets amounts of cash collateral deposited with counterparties arising from certain derivative instruments executed with the same counterparty against the fair value amounts reported for those derivative instruments. The Company had no derivative instruments as of March 31, 2013 and December 31, 2012. The effects of derivative instruments on our consolidated financial statements were as follows for the three months ended March 31, 2013 and 2012 (in thousands) (amounts presented exclude any income tax effects).

Effects of Derivative Instruments on Income

		Three Months Ended March 31,
Consolidated Statements of Operations Location		2013		2012
		gain (loss)		gain (loss)
Derivative not designated as hedging instrument:
Commodity contract	Net sales	$	—	$	(880	)
Commodity contract	Cost of goods sold		—		190
	Net amount recognized in earnings	$	—	$	(690	)

In accordance with these provisions, we have categorized our financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded on the Company’s consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date.

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:

· Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently);

· Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and

· Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives).

As of March 31, 2013, we do not have any level 2 financial assets and liabilities.

19

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

8. Derivative Financial Instruments – (continued)

Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. As of March 31, 2013, we do not have any Level 3 financial assets or liabilities.

There were no transfers between the various financial asset and liability levels during the three months ended March 31, 2013.

9. Stock-Based Compensation

The following table summarizes the stock-based compensation expense incurred by the Company (in thousands):

	Three Months Ended March 31,
(In thousands)	2013		2012
Stock options	$	90	$	295
Restricted stock		169		112
Total	$	259	$	407

2007 Equity Incentive Compensation Plan

Immediately prior to the Company’s initial public offering, the Company adopted the 2007 Equity Incentive Compensation Plan (“2007 Plan”). The 2007 Plan provides for the grant of options intended to qualify as incentive stock options, non-qualified stock options, stock appreciation rights or restricted stock awards and any other equity-based or equity-related awards. The 2007 Plan is administered by the Compensation Committee of the Board of Directors. Subject to adjustment for changes in capitalization, the aggregate number of shares that may be delivered pursuant to awards under the 2007 Plan is currently 355,000. The term of the 2007 Plan is ten years, expiring in June 2017.

Stock Options — Except as otherwise directed by the Compensation Committee, the exercise price for options cannot be less than the fair market value of our common stock on the grant date. Other than the stock options issued to Directors, the options will generally vest and become exercisable with respect to 30%, 30% and 40% of the shares of our common stock subject to such options on each of the first three anniversaries of the grant date. Compensation expense related to these options is expensed on a straight line basis over the three year service period. Options issued to Directors generally vest and become exercisable on the first anniversary of the grant date. All stock options have a five year term from the date of grant. During the three months ended March 31, 2013 and 2012, the Company did not issue any stock options under the 2007 Plan.

20

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

9. Stock-Based Compensation – (continued)

A summary of stock option activity under the 2007 Plan as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Life (years)		Aggregate Intrinsic Value
Options outstanding, January 1, 2013		71,237		$	61.72
Granted		—			—
Exercised		—			—
Forfeited		(1,888	)		117.46
Options outstanding, March 31, 2013		69,349		$	60.20		1.7	$	0.00
Options exercisable, March 31, 2013		69,349		$	60.20		1.7	$	0.00

A summary of the status of our unvested stock options as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Grant Date Fair Value
Unvested, January 1, 2013		10,074		$	46.01
Granted		—			—
Vested		(10,074	)		46.01
Forfeited		—			—
Unvested, March 31, 2013		—		$	—

21

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

9. Stock-Based Compensation – (continued)

Restricted Stock  — Other than restricted stock issued to Directors, the restricted stock issued will generally vest in equal increments of 25% on each of the first four anniversaries of the grant date. Compensation expense related to restricted stock issued is expensed on a straight line basis over the four year vesting period. Restricted stock issued to Directors generally vests on the first anniversary of the grant date with compensation expense being expensed on a straight line basis over the one year vesting period. During the three months ended March 31, 2013 and 2012, the Company granted 0 and 78,850 shares, respectively, under the 2007 Plan to certain of our employees and our non-employee Directors.

A summary of restricted stock activity under the 2007 Plan as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Grant Date Fair Value per Award		Aggregate Intrinsic Value
Restricted stock outstanding, January 1, 2013		143,026		$	13.82
Granted		—			—
Vested		(41,798	)		14.40
Cancelled or expired		—			—
Restricted stock outstanding, March 31, 2013		101,228		$	13.58	$	517,275

As of March 31, 2013, there was $1,345,000 of unrecognized compensation expense related to the unvested portion of restricted stock outstanding. This expense is expected to be recognized over three years.

After considering the stock option and restricted stock awards issued and outstanding, the Company had 109,497 shares of common stock available for future grant under our 2007 Plan at March 31, 2013.

22

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

10. Income Taxes

The Company has not recognized any income tax provision (benefit) for the three months ended March 31, 2013 and 2012 due to continuing losses from operations.

The U.S. statutory federal income tax rate is reconciled to the Company’s effective income tax rate as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Tax benefit at 35% federal statutory rate	$	1,865		$	3,883
State tax benefit, net of federal benefit		27			55
Noncontrolling interest		(246	)		(598	)
Valuation allowance		(1,537	)		(3,051	)
Other		(109	)		(289	)
	$	—		$	—

The effects of temporary differences and other items that give rise to deferred tax assets and liabilities are presented below (in thousands):

	March 31, 2013			December 31, 2012
Deferred tax assets:
Capitalized start up costs	$	3,143		$	3,253
Stock-based compensation		965			965
Net operating loss carryover		86,256			84,960
Other		268			266
Deferred tax assets		90,632			89,444
Valuation allowance		(49,081	)		(47,544	)
Deferred tax liabilities:
Property, plant and equipment		(41,551	)		(41,900	)
Deferred tax liabilities		(41,551	)		(41,900	)
Net deferred tax asset	$	—		$	—

The Company assesses the recoverability of deferred tax assets and the need for a valuation allowance on an ongoing basis. In making this assessment, management considers all available positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized in future periods. This assessment requires significant judgment and estimates involving current and deferred income taxes, tax attributes relating to the interpretation of various tax laws, historical bases of tax attributes associated with certain assets and limitations surrounding the realization of deferred tax assets.

As of March 31, 2013, the net operating loss carryforward was $242.4 million, which will begin to expire if not used by December 31, 2028. The U.S. federal statute of limitations remains open for our 2009 and subsequent tax years.

11. Employee Benefit Plans

The LLC sponsors a 401(k) profit sharing and savings plan for its employees. Employee participation in this plan is voluntary and the LLC matches 50% of eligible employee contributions, up to an amount equal to 3% of employee compensation, on a biweekly basis. For the three months ended March 31, 2013 and 2012, contributions to the plan by the LLC totaled $47,000 and $83,000, respectively.

23

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

12. Commitments and Contingencies

The Operating Subsidiaries entered into two operating lease agreements with Cargill. Cargill’s grain handling and storage facilities, located adjacent to the Wood River and Fairmont plants, are being leased for 20 years, which began in September 2008 for both plants. Minimum annual payments initially were $800,000 for the Fairmont plant and $1,000,000 for the Wood River plant so long as the associated corn supply agreements with Cargill remain in effect. Should the Operating Subsidiaries not maintain its corn supply agreements with Cargill, the minimum annual payments under each lease increase to $1,200,000 and $1,500,000, respectively. The leases contain escalation clauses that are based on the percentage change in the Midwest Consumer Price Index. The escalation clauses are considered to be contingent rent and, accordingly, are not included in minimum lease payments. Rent expense is recognized on a straight line basis over the terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations and insolvency. Effective September 1, 2009, the Operating Subsidiaries and Cargill entered into Omnibus Agreements whereby the two operating lease agreements were modified, for a period of one year, to defer a portion of the monthly lease payments. The deferred lease payments were to be paid back to Cargill over a two year period beginning September 1, 2010. On September 23, 2010, the Operating Subsidiaries and Cargill entered into a letter agreement (“Letter Agreement”) whereby (i) effective October 2010 the minimum annual payments under the leases were reduced to $50,000 for the Fairmont plant and $250,000 for the Wood River plant and (ii) repayment of the deferred lease payments have been deferred for an indefinite period of time. As of March 31, 2013, the deferred lease payments totaled $1.6 million and are included in other non-current liabilities.

Beginning in the second quarter of 2008, the Operating Subsidiaries entered into agreements to lease railroad cars over a period of ten years. Pursuant to these lease agreements, the Operating Subsidiaries are currently leasing 785 railroad cars for approximately $6.7 million per year. Monthly rental charges escalate if modifications of the cars are required by governmental authorities or mileage exceeds 30,000 miles in any calendar year. Rent expense is recognized on a straight line basis over the terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations.

In April 2008, the LLC entered into a five year lease that began July 1, 2008 for office space for its corporate headquarters. Rent expense is being recognized on a straight line basis over the term of the lease.

In October 2011, the Operating Subsidiaries entered into two operating lease agreements to lease corn oil extraction systems, one for each of its plants. Each lease agreement is for a period of two years and commenced in April 2012 when funding was completed. Pursuant to these lease agreements, the Operating Subsidiaries are paying approximately $4.3 million per year for the corn oil extraction systems. Rent expense is recognized on a straight line basis over the terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations under either lease, as well as any payment default under any of the Company’s other material debt obligations, including the Senior Debt Facility. The Company has informed Farnam Street Financial, Inc. (“Farnam”) of the default notice it received from its senior lenders, and Farnam has elected not to declare a default under either lease agreement so long as the Operating Subsidiaries continue to make timely lease payments.` 

Future minimum operating lease payments at March 31, 2013 are as follows (in thousands):

Remainder of 2013	$	8,578
2014		8,392
2015		6,972
2016		6,972
2017		6,972
Thereafter		5,197
Total	$	43,083

Rent expense recorded for the three months ended March 31, 2013 and 2012 totaled $2,861,000 and $2,822,000, respectively.

Pursuant to long-term agreements, Cargill is the exclusive supplier of corn to the Wood River and Fairmont plants for twenty years commencing September 2008. The price of corn purchased under these agreements is based on a formula including cost plus an origination fee of $0.048 per bushel. The minimum annual origination fee payable to Cargill per plant under the agreements is $1.2 million. The agreements contain events of default that include failure to pay, willful misconduct, purchase of corn from another supplier, insolvency or the termination of the associated grain facility lease. Effective September 1, 2009, the Operating Subsidiaries and Cargill entered into Omnibus Agreements whereby the two corn supply agreements were modified, for a period of one year, extending payment terms for our corn purchases which were to revert to the original terms on September 1, 2010. On September 23, 2010, the Operating Subsidiaries and Cargill entered into a Letter Agreement whereby the extended payment terms for our corn purchases will remain in effect for the remainder of the two corn supply agreements.

24

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

12. Commitments and Contingencies – (continued)  

At March 31, 2013, the Operating Subsidiaries had contracted to purchase 63,000 bushels of corn to be delivered between April 2013 and October 2013 at our Fairmont location, and 7,367,000 bushels of corn to be delivered between April 2013 and May 2014 at our Wood River location. The purchase commitment for the Wood River location represents 18% of the projected corn requirements during that period. The purchase price of the corn will be determined at the time of delivery.

Cargill has agreed to purchase all ethanol produced at the Wood River and Fairmont plants through September 2016. Under the terms of the ethanol marketing agreements, the Wood River and Fairmont plants generally participate in a marketing pool in which all parties receive the same net price. That price is generally the average delivered price per gallon received by the marketing pool less average transportation and storage charges and less a commission. In certain circumstances, the plants may elect not to participate in the marketing pool. Minimum annual commissions are payable to Cargill equal to 1% of Cargill’s average selling price for 82.5 million gallons of ethanol from each plant. The ethanol marketing agreements contain events of default that include failure to pay, willful misconduct and insolvency. Effective September 1, 2009, the subsidiaries and Cargill entered into Omnibus Agreements whereby the two ethanol marketing agreements were modified, for a period of one year, to defer a portion of the monthly ethanol commission payments. The deferred commission payments were to be paid to Cargill over a two year period beginning September 1, 2010. On September 23, 2010, the subsidiaries and Cargill entered into a Letter Agreement whereby (i) effective September 24, 2010 the ethanol commissions were reduced and (ii) repayment of the deferred commission payments have been deferred for an indefinite period of time with any repayment at the discretion of the Operating Subsidiaries. As of March 31, 2013, the deferred ethanol commissions totaled $1.0 million and are included in other non-current liabilities.

The Company is not currently a party to any material legal, administrative or regulatory proceedings that have arisen in the ordinary course of business or otherwise that would result in loss contingencies.

25

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

13. Noncontrolling Interest

Noncontrolling interest consists of equity issued to members of the LLC upon the Company’s initial public offering in June 2007. As provided in the LLC agreement, the exchange ratio of the various existing classes of equity of the LLC for the single class of equity at the time of the Company’s initial public offering was based on the Company’s initial public offering price of $210.00 per share and the resulting implied valuation of the Company. The exchange resulted in the issuance of 897,903 LLC membership units and Class B common shares. Each LLC membership unit combined with a share of Class B common stock is exchangeable at the holder’s option into one share of Company common stock. The LLC may make distributions to members as determined by the Company.

At the time of its initial public offering, the Company owned 28.9% of the LLC membership units of the LLC. At March 31, 2013, the Company owned 87.3% of the LLC membership units. The noncontrolling interest will continue to be reported until all Class B common shares and LLC membership units have been exchanged for the Company’s common stock.

The table below shows the effects of the changes in BioFuel Energy Corp.’s ownership interest in the LLC on the equity attributable to BioFuel Energy Corp.’s common stockholders for the three months ended March 31, 2013 and 2012 (in thousands):

Net Loss Attributable to BioFuel Energy Corp.’s Common Stockholders and

Transfers from the Noncontrolling Interest

	Three Months Ended March 31,
	2013			2012
Net loss attributable to BioFuel Energy Corp.	$	(4,635	)	$	(9,408	)
Increase in BioFuel Energy Corp. stockholders equity from issuance of common shares in exchange for Class B common shares and units of BioFuel Energy, LLC		—			—
Change in equity from net loss attributable to BioFuel Energy Corp. and transfers from noncontrolling interest	$	(4,635	)	$	(9,408	)

26

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

13. Noncontrolling Interest – (continued)

Tax Benefit Sharing Agreement

Membership units in the LLC combined with the related Class B common shares held by the historical equity investors may be exchanged in the future for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. The LLC will make an election under Section 754 of the IRS Code effective for each taxable year in which an exchange of membership units and Class B shares for common shares occurs, which may result in an adjustment to the tax basis of the assets owned by the LLC at the time of the exchange. Increases in tax basis, if any, would reduce the amount of tax that the Company would otherwise be required to pay in the future, although the IRS may challenge all or part of the tax basis increases, and a court could sustain such a challenge. The Company has entered into tax benefit sharing agreements with its historical LLC investors that will provide for a sharing of these tax benefits, if any, between the Company and the historical LLC equity investors. Under these agreements, the Company will make a payment to an exchanging LLC member of 85% of the amount of cash savings, if any, in U.S. federal, state and local income taxes the Company actually realizes as a result of this increase in tax basis. The Company and its common stockholders will benefit from the remaining 15% of cash savings, if any, in income taxes realized. For purposes of the tax benefit sharing agreement, cash savings in income tax will be computed by comparing the Company’s actual income tax liability to the amount of such taxes the Company would have been required to pay had there been no increase in the tax basis in the assets of the LLC as a result of the exchanges. The term of the tax benefit sharing agreement commenced on the Company’s initial public offering in June 2007 and will continue until all such tax benefits have been utilized or expired, unless a change of control occurs and the Company exercises its resulting right to terminate the tax benefit sharing agreement for an amount based on agreed payments remaining to be made under the agreement.

True Up Agreement

At the time of formation of the LLC, the founders agreed with certain of our principal stockholders as to the relative ownership interests in the Company of our management members and affiliates of Greenlight Capital, Inc. (“Greenlight”) and Third Point LLC (“Third Point”). Certain management members and affiliates of Greenlight and Third Point agreed to exchange LLC membership interests, shares of common stock or cash at a future date, referred to as the “true-up date”, depending on the Company’s performance. This provision functioned by providing management with additional value if the Company’s value improved and by reducing management’s interest in the Company if its value decreased, subject to a predetermined rate of return accruing to Greenlight and Third Point. In particular, if the value of the Company increased from the time of the initial public offering to the “true-up date”, the management members were entitled to receive LLC membership units, shares of common stock or cash from the affiliates of Greenlight and Third Point. On the other hand, if the value of the Company decreased from the time of the initial public offering to the “true-up date” or if a predetermined rate of return was not met, the affiliates of Greenlight and Third Point were entitled to receive LLC membership units or shares of common stock from the management members.

The “true-up date” occurred on June 19, 2012, which was five years from the date of the initial public offering. Since the value of the Company decreased from the time of the initial public offering to the “true-up date”, the affiliates of Greenlight and Third Point received 69,382 and 34,691 LLC membership units, respectively, from certain members or former members of our management group during the third quarter of 2012 as a result of the “true-up”. No new shares were issued as a result of the “true-up” but rather a redistribution of shares occurred among certain members or former members of our management group and our two largest investors, Greenlight and Third Point.

27

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the unaudited consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Specifically, forward-looking statements may be preceded by, followed by or may include such words as “estimate”, “plan”, “project”, “forecast”, “intend”, “expect”, “is to be”, “anticipate”, “goal”, “believe”, “seek”, “target” or other similar expressions. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Form 10-Q, or in the case of a document incorporated by reference, as of the date of that document. Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Our actual results may differ materially from those discussed in or implied by any of the forward-looking statements as a result of various factors, including but not limited to those listed elsewhere in this Form 10-Q and those listed in our Annual Report on Form 10-K for the year ended December 31, 2012 or in any other documents we have filed with the Securities and Exchange Commission.

Overview

BioFuel Energy Corp. (“we” or “the Company”) produces and sells ethanol and its related co-products, primarily distillers grain and corn oil. We have historically operated our two dry-mill ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota. Each of these plants has an undenatured nameplate production capacity of approximately 110 million gallons per year (“Mmgy”). Our operations are subject to changes in commodity prices, specifically, the price of our main commodity input, corn, relative to the price of our main commodity product, ethanol, which is known in the industry as the “crush spread”. Drought conditions in the American Midwest significantly impacted the 2012 corn crop and caused a significant reduction in the corn yield. This led to an increase in the price of corn and a corresponding narrowing in the crush spread as ethanol prices did not rise sufficiently with rising corn prices, due to an oversupply of ethanol. As a result, in September 2012 the Company decided to idle its Fairmont facility and in February 2013 we reduced staffing at the Fairmont facility. Although crush spreads have improved during the first quarter of 2013, our Fairmont plant remains idle. However, we continue to evaluate the economic viability of restarting our Fairmont facility, including the working capital that would be required to restart.

We are a holding company with no operations of our own, and are the sole managing member of BioFuel Energy, LLC (the “LLC”), which is itself a holding company and indirectly owns all of our operating assets. As the sole managing member of the LLC, BioFuel Energy Corp. operates and controls all of the business and affairs of the LLC and its subsidiaries. The Company’s ethanol plants are owned and operated by the operating subsidiaries of the LLC (the “Operating Subsidiaries”). Those Operating Subsidiaries are party to a Credit Agreement (the “Senior Debt Facility”) with a group of lenders, for which First National Bank of Omaha acts as Administrative Agent, and substantially all of the assets of the Operating Subsidiaries are pledged as collateral under the Senior Debt Facility. Neither the Company nor the LLC is a party, either as borrower or guarantor, under the Senior Debt Facility, and none of their respective assets, other than the LLC interests in the Operating Subsidiaries themselves, are pledged as collateral under the Senior Debt Facility.

We work closely with Cargill, one of the world’s leading agribusiness companies, with whom we have an extensive commercial relationship. At each of our plant locations, Cargill has a local grain origination presence and owns adjacent grain storage and handling facilities, which we lease from them. Cargill provides corn procurement services, markets the ethanol we produce and provides transportation logistics for our two plants under long-term contracts. We have also from time to time relied upon extensions of payment terms by Cargill as a source of liquidity and working capital. See – “Liquidity and capital resources”. 

28

Liquidity and Going Concern Considerations

Our financial results and cash flows are subject to wide and unpredictable fluctuations in the crush spread. The price of our main co-product, distillers grain, is likewise subject to wide, unpredictable fluctuations, typically in conjunction with changes in the price of corn. The prices of these commodities are volatile and beyond our control. As a result of the volatility of the prices for these and other items, our results fluctuate substantially and in ways that are largely beyond our control. As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $5.3 million during the three months ended March 31, 2013. Narrow commodity margins present a significant risk to our cash flows and liquidity. We have had, and continue to have, limited liquidity, with $9.6 million of cash and cash equivalents as of March 31, 2013, of which $8.3 million was held at the LLC and $1.3 million was held at the Operating Subsidiaries, which is subject to the lenders’ liens under the Senior Debt Facility. 

Due to our limited and declining liquidity, our Board of Directors determined that, in order to preserve cash at the LLC, the Operating Subsidiaries would not make the regularly-scheduled payments of principal and interest that were due under the outstanding Senior Debt Facility on September 28, 2012, in an aggregate amount of $3.6 million. As a result, the Operating Subsidiaries received a Notice of Default from First National Bank of Omaha, as Administrative Agent for the lenders under the Senior Debt Facility. Since the initial default, the Operating Subsidiaries have not made any of the regularly-scheduled principal and interest payments, which through March 31, 2013 totaled $12.9 million.

On April 11, 2013, the Operating Subsidiaries entered into a definitive agreement (the “Lender Agreement”) with First National Bank of Omaha, as Escrow Agent under the Lender Agreement, and as Administrative Agent and Collateral Agent for the lenders under the Senior Debt Facility. Under the terms of the Lender Agreement, the Administrative Agent and the lenders have agreed to provide the Operating Subsidiaries with a grace period until July 30, 2013 to allow the Company to pursue one or more strategic alternatives, including but not limited to a potential sale of one or both of the Company’s ethanol plants. This grace period is subject to the achievement of certain milestones, and may be extended at the sole discretion of the Administrative Agent. The Company has engaged Piper Jaffray & Co. to act as its financial advisor to assist us in exploring these strategic alternatives. In the event of a sale of one or both of our ethanol plants, the proceeds of such sale would first be applied to repay all or a portion of the outstanding indebtedness under the Senior Debt Facility. Residual proceeds after satisfying the senior indebtedness, if any, would accrue to the Company. Any such sale would also most likely require the consent of the lenders under the Senior Debt Facility.

Simultaneously with the execution of the Lender Agreement, the Operating Subsidiaries, the Administrative Agent and the lenders under the Senior Debt Facility also entered into a Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions (the “Deed in Lieu Agreement”), pursuant to which, among other things, the Operating Subsidiaries have agreed to transfer ownership of their respective ethanol plants, including the underlying real property, personal property and all material contracts used to operate the plants, to certain designees of the Administrative Agent and the lenders (“Newco”), in full satisfaction of all outstanding obligations under the Senior Debt Facility and in lieu of the Administrative Agent and the lenders exercising their rights and remedies under the Senior Debt Facility. The Company has made a contingent payment into escrow of $938,000 for the anticipated payment of certain obligations and liabilities of the Operating Subsidiaries which are to be paid or assumed by Newco in conjunction with any such transfer. In conjunction with any such transfer, the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

Under the terms of the Lender Agreement, the Deed in Lieu Agreement is to be held in escrow by the Escrow Agent until the earlier of such time as the Company and its Operating Subsidiaries have completed their pursuit of the strategic alternatives described above or July 30, 2013, unless otherwise extended by the Administrative Agent.

Although the Company intends to diligently explore and pursue any number of strategic alternatives, we cannot assure you that it will be able to do so on terms acceptable to the Company or to the lenders under the Senior Debt Facility, if at all. In addition, in either the case of a transfer of the assets of the Operating Subsidiaries to the lenders under the Senior Debt Facility or a sale of one or both of our plants, as discussed above, we cannot assure you as to what value, if any, may be derived for shareholders of the Company from such transfer or sale.

As of March 31, 2013, the Operating Subsidiaries had $170.5 million of principal indebtedness outstanding under the Senior Debt Facility. The entire amount outstanding under the Senior Debt Facility has been classified as a current liability in the March 31, 2013 consolidated balance sheet.

The consolidated financial statements that are included elsewhere in this report have been prepared assuming that the Company will continue as a going concern; however, the default of our Operating Subsidiaries under the Senior Debt Facility, the cessation of operations at the Fairmont ethanol facility, and our limited liquidity all raise substantial doubt about the Company’s ability to do so. Our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

29

Basis for Consolidation

At March 31, 2013, the Company owned 87.3% of the LLC membership units with the remaining 12.7% owned by an individual and by certain investment funds affiliated with one of the original equity investors of the LLC. As a result, the Company consolidates the results of the LLC. The amount of income or loss allocable to the 12.7% holders is reported as noncontrolling interest in our consolidated statements of operations. The Class B common shares of the Company are held by the same individual and investment funds who held 795,479 membership units in the LLC as of March 31, 2013 that, together with the corresponding Class B shares, can be exchanged for newly issued shares of common stock of the Company on a one-for-one basis. The proportionate value of the LLC membership units held by the individual or investment funds other than the Company are recorded as noncontrolling interest on the consolidated balance sheets.

Revenues

Our primary source of revenue is the sale of ethanol. The selling prices we realize for our ethanol are largely determined by the market supply and demand for ethanol, which, in turn, is influenced by industry and other factors, including government policy and regulations, over which we have little control. Ethanol prices are extremely volatile.  Ethanol revenues are recorded net of transportation and storage charges, and net of marketing commissions we pay to Cargill.

We also receive revenue from the sale of distillers grain, which is a residual co-product of the processed corn used in the production of ethanol and is sold as animal feed. The selling prices we realize for our distillers grain are largely determined by the market supply and demand, primarily from livestock operators and marketing companies in the U.S. and internationally. Distillers grain is sold by the ton and, based upon the amount of moisture retained in the product, can either be sold “wet” or “dry”.

The Company installed corn oil extraction systems at its plant in Wood River in December 2011 and at its plant in Fairmont in January 2012. Both Operating Subsidiaries began generating revenues from corn oil sales in the first quarter of 2012. The corn oil produced at our plants is non-food grade and is used primarily as a feedstock for the production of biodiesel and as an animal feed ingredient. We market the corn oil produced in Wood River ourselves, although a portion is often sold to the same third party marketer that purchases our dried distillers grain from that facility. Most of the corn oil produced in Fairmont was being sold to a biodiesel producer under an off-take agreement.

30

Cost of goods sold and gross profit (loss)

Our gross profit (loss) is derived from our revenues less our cost of goods sold. Our cost of goods sold is affected primarily by the cost of corn and natural gas. The prices of both corn and natural gas are volatile and can vary as a result of a wide variety of factors, including weather, market demand, regulation and general economic conditions, all of which are outside of our control.

Corn is our most significant raw material cost. Rising corn prices may result in lower profit margins because changes in ethanol prices are not necessarily correlated with changes in corn prices and therefore producers are not always able to pass along increased corn costs to customers. The price and availability of corn is influenced by weather conditions and other factors affecting crop yields, farmer planting decisions and general economic, market and regulatory factors. These factors include government policies and subsidies with respect to agriculture and international trade, and global and local demand and supply for corn and for other agricultural commodities for which it may be substituted, such as soybeans. Historically, the cash price we pay for corn, relative to the spot price of corn, tends to rise during the spring planting season in April and May as the local basis (i.e., discount) contracts, and tends to decrease relative to the spot price during the fall harvest in October and November as the local basis expands.

We also purchase natural gas to power steam generation in our ethanol production process and as fuel for our dryers to dry our distillers grain. Natural gas represents our second largest operating cost after corn, and natural gas prices are extremely volatile. Historically, the spot price of natural gas tends to be highest during the heating and cooling seasons and tends to decrease during the spring and fall.

Corn procurement fees paid to Cargill are included in our cost of goods sold. Other cost of goods sold primarily consists of our cost of chemicals and enzymes, electricity, depreciation, manufacturing overhead and rail car lease expense.

General and administrative expenses

General and administrative expenses consist of salaries and benefits paid to our management and administrative employees, expenses relating to third party services, travel, office rent, marketing and other expenses, including expenses associated with being a public company, such as fees paid to our independent auditors associated with our annual audit and quarterly reviews, directors’ fees, and listing and transfer agent fees. 

Results of operations

The following discussion summarizes the significant factors affecting the consolidated operating results of the Company for the three months ended March 31, 2013 and March 31, 2012. This discussion should be read in conjunction with the unaudited consolidated financial statements and notes to the unaudited consolidated financial statements contained in this Form 10-Q.

The following table sets forth net sales, expenses and net loss, as well as the percentage relationship to net sales of certain items in our consolidated statements of operations:

	Three Months Ended March 31,
	2013					2012
	(dollars in thousands)
Net sales	$	89,041		100.0	%	$	139,413		100.0	%
Cost of goods sold		90,912		102.1			145,933		104.7
Gross loss		(1,871	)	(2.1	)		(6,520	)	(4.7	)
General and administrative expenses		3,031		3.4			2,735		2.0
Operating loss		(4,902	)	(5.5	)		(9,255	)	(6.7	)
Other income		1,459		1.6			—		(0.0	)
Interest expense		(1,885	)	(2.1	)		(1,838	)	(1.3	)
Net loss		(5,328	)	(6.0	)		(11,093	)	(8.0	)
Less: Net loss attributable to the noncontrolling interest		693		0.8			1,685		1.2
Net loss attributable to BioFuel Energy Corp. common stockholders	$	(4,635	)	(5.2	)%	$	(9,408	)	(6.8	)%

31

The following table sets forth key operational data for the three months ended March 31, 2013 and March 31, 2012 that we believe are important indicators of our results of operations:

	Three Months Ended March 31,
	2013		2012
Ethanol sold (gallons, in thousands)		27,573.4		51,970.9
Dry distillers grains sold (tons, in thousands)		8.9		54.0
Wet distillers grains sold (tons, in thousands)		204.6		251.4
Corn oil sold (pounds, in thousands)		7,410.0		6,842.0
Corn Ground (bushels, in thousands)		9,758.8		18,855.6

Three Months Ended March 31, 2013 Compared to the Three Months Ended March 31, 2012

Net Sales:   Net Sales were $89.0 million for the three months ended March 31, 2013 compared to $139.4 million for the three months ended March 31, 2012, a decrease of $50.4 million or 36.2%. This decrease was primarily attributable to a decrease in ethanol revenues of $43.6 million and a decrease in co-products revenue of $6.8 million. The decrease in both ethanol and co-products revenue was primarily attributable to a decrease in the quantity of ethanol produced and sold, which was partially offset by higher per unit prices received for both our ethanol and co-products. Lower production and sales as compared to the prior year resulted from the continued shutdown of our Fairmont plant, which occurred in September 2012.

Cost of goods sold:   The following table sets forth the components of cost of goods sold for the three months ended March 31, 2013 and March 31, 2012:

	Three Months Ended March 31,
	2013				2012
	Amount		Per Gallon of Ethanol		Amount		Per Gallon of Ethanol
	(amounts in thousands, except per gallon amounts)
Corn	$	71,668	$	2.60	$	118,837	$	2.29
Natural gas		2,371	$	0.09		4,654	$	0.09
Denaturant		1,119	$	0.04		1,850	$	0.04
Electricity		1,636	$	0.06		3,292	$	0.06
Chemicals and enzymes		1,944	$	0.07		3,572	$	0.07
General operating expenses		5,594	$	0.20		7,198	$	0.14
Depreciation		6,580	$	0.24		6,530	$	0.13
Cost of goods sold	$	90,912			$	145,933

Cost of goods sold was $90.9 million for the three months ended March 31, 2013 compared to $145.9 million for the three months ended March 31, 2012, a decrease of $55.0 million or 37.7%. The decrease was primarily attributable to a $47.2 million decrease in the cost of corn and a $2.3 million decrease in natural gas expense. The decrease in corn cost was primarily attributable to a decrease in the amount of corn ground as compared to the year ago period, resulting from the Fairmont plant shutdown. The decrease in natural gas expense resulted primarily from a decrease in the amount of production of dry distillers grain as compared to the year ago period, also due to the Fairmont plant shutdown. General operating expenses and depreciation increased on a per gallon of ethanol basis from the three months ended March 31, 2012 to the three months ended March 31, 2013. These costs are mostly fixed costs and therefore as production volumes decreased, their cost per gallon of ethanol increased.

General and administrative expenses:   General and administrative expenses did not change materially from the three months ended March 31, 2013, compared to the three months ended March 31, 2012.

Other income:   Other income was $1.5 million for the three months ended March 31, 2013. Other income relates to the subleasing of excess ethanol tanker cars that commenced in the second quarter of 2012.

Interest expense: Interest expense did not change materially from the three months ended March 31, 2013, compared to the three months ended March 31, 2012.

32

Liquidity and capital resources

Our cash flows from operating, investing and financing activities during the three months ended March 31, 2013 and March 31, 2012 are summarized below (in thousands):

	Three Months Ended March 31,
	2013			2012
Cash provided by (used in):
Operating activities	$	819		$	330
Investing activities		(499	)		(581	)
Financing activities		(28	)		(3,201	)
Net increase (decrease) in cash and equivalents	$	292		$	(3,452	)

Cash provided by operating activities.   Net cash provided by operating activities was $0.8 million for the three months ended March 31, 2013, compared to $0.3 million for the three months ended March 31, 2012.  For the three months ended March 31, 2013, the amount was primarily comprised of a net loss of $5.3 million, which was offset by non-cash charges of $7.3 million, which were primarily depreciation and amortization. For the three months ended March 31, 2012, the amount was primarily comprised of a net loss of $11.1 million which was offset by working capital sources of $3.9 million and non-cash charges of $7.5 million, which were primarily depreciation and amortization.

Cash used in investing activities.   Net cash used in investing activities was $0.5 million for the three months ended March 31, 2013, compared to $0.6 million for the three months ended March 31, 2012. The net cash used in investing activities during both periods was for capital expenditures related to various plant improvement projects.

Cash used in financing activities.   Net cash used in financing activities was nominal for the three months ended March 31, 2013, compared to $3.2 million for the three months ended March 31, 2012. For the three months ended March 31, 2012, the amount was mostly comprised of our $3.2 million principal payment under our Senior Debt Facility. No such payment was made during the three months ended March 31, 2013.

The LLC’s principal source of liquidity at March 31, 2013 consisted of cash generated from its management services agreements between the LLC and our Operating Subsidiaries, which totals $0.3 million per month, and its cash and cash equivalents of $8.3 million. The LLC has no obligation to fund any of the Operating Subsidiaries cash flow needs. The Operating Subsidiaries principal source of liquidity at March 31, 2013 consisted of cash generated from operations and cash and cash equivalents of $1.3 million. The Operating Subsidiaries have also relied upon extensions of payment terms by Cargill as an additional source of liquidity and working capital. As of March 31, 2013, the Operating Subsidiaries owed Cargill $10.6 million for accounts payable related to corn purchases. Pursuant to an arrangement with Cargill, the Operating Subsidiaries have been permitted to extend corn payment terms beyond the $10.0 million contractual limit so long as the amounts Cargill owes the Operating Subsidiaries for ethanol exceed their accounts payable balance by an amount that is satisfactory to Cargill. This arrangement may be terminated by Cargill at any time on little or no notice, in which case the Operating Subsidiaries would need to use cash on hand or other sources of liquidity, if available, to fund their operations.

Our principal liquidity needs are expected to be funding our plant operations, capital expenditures and general corporate purposes. As noted elsewhere in this report, the Company incurred a net loss of $5.3 million during the three months ended March 31, 2013. We have had, and continue to have, limited liquidity. We cannot predict when or if crush spreads will fluctuate again or if the current commodity margins will improve or worsen. As described in “Overview” above, we idled our Fairmont facility in September 2012, and as described in “Liquidity and Going Concern Considerations” the Operating Subsidiaries have not made their regularly-scheduled payments of principal and interest that were due under the outstanding Senior Debt Facility since September 28, 2012, which caused the Administrative Agent under the Senior Debt Facility to issue a notice of default.

33

Senior Debt Facility

In September 2006, the Operating Subsidiaries entered into the Senior Debt Facility to finance the construction of and provide working capital to operate our ethanol plants. Neither the Company nor the LLC is a borrower or a guarantor under the Senior Debt Facility, although the equity interests and assets of our subsidiaries are pledged as collateral to secure the debt under the facility. Principal payments under the Senior Debt Facility are payable quarterly at a minimum amount of $3,150,000, with additional pre-payments to be made out of available cash flow. These term loans mature in September 2014.

The Operating Subsidiaries did not make the regularly-scheduled payments of principal and interest that were due under the outstanding Senior Debt Facility on September 28, 2012, in an aggregate amount of $3.6 million. As a result, the Operating Subsidiaries received a Notice of Default from First National Bank of Omaha, as Administrative Agent for the lenders under the Senior Debt Facility. Since the initial default the Operating Subsidiaries have not made any of the regularly-scheduled principal and interest payments, which through March 31, 2013 totaled $12.9 million.

On April 11, 2013, the Operating Subsidiaries entered into a Lender Agreement with First National Bank of Omaha, as Escrow Agent under the Lender Agreement, and as Administrative Agent and Collateral Agent for the lenders under the Senior Debt Facility. Under the terms of the Lender Agreement, the Administrative Agent and the lenders have agreed to provide the Operating Subsidiaries with a grace period until July 30, 2013 to allow the Company to pursue one or more strategic alternatives, including but not limited to a potential sale of one or both of the Company’s ethanol plants. This grace period is subject to the achievement of certain milestones, and may be extended at the sole discretion of the Administrative Agent. The Company has engaged Piper Jaffray & Co. to act as its financial advisor to assist us in exploring these strategic alternatives.

Simultaneously with the execution of the Lender Agreement, the Operating Subsidiaries, the Administrative Agent and the lenders under the Senior Debt Facility also entered into a Deed in Lieu Agreement, pursuant to which, among other things, the Operating Subsidiaries have agreed to transfer ownership of their respective ethanol plants, including the underlying real property, personal property and all material contracts used to operate the plants, to Newco, in full satisfaction of all outstanding obligations under the Senior Debt Facility and in lieu of the Administrative Agent and the lenders exercising their rights and remedies under the Senior Debt Facility. The Company has made a contingent payment into escrow of $938,000 for the anticipated payment of certain obligations and liabilities of the Operating Subsidiaries which are to be paid or assumed by Newco in conjunction with any such transfer. In conjunction with any such transfer, the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

Under the terms of the Lender Agreement, the Deed in Lieu Agreement is to be held in escrow by the Escrow Agent until the earlier of such time as the Company and its Operating Subsidiaries have completed their pursuit of the strategic alternatives described above or July 30, 2013, unless otherwise extended by the Administrative Agent.

As of March 31, 2013, the Operating Subsidiaries had $170.5 million of principal indebtedness outstanding under the Senior Debt Facility. The entire amount outstanding under the Senior Debt Facility has been classified as a current liability in the March 31, 2013 consolidated balance sheet.

Interest rates on the Senior Debt Facility are, at management’s option, set at: i) a base rate, which is the higher of the federal funds rate plus 0.5% or the administrative agent’s prime rate, in each case plus a margin of 2.0%; or ii) at LIBOR plus 3.0%. Interest on base rate loans is payable quarterly and, depending on the LIBOR rate elected, as frequently as monthly on LIBOR loans, but no less frequently than quarterly. In addition, since the Operating Subsidiaries defaulted on their payments of principal and interest in September 2012, those unpaid balances have accrued interest at a penalty rate of 8.3%. The interest rate in effect on the borrowings at both March 31, 2013 and December 31, 2012 was 3.2%.

34

The Senior Debt Facility is secured by a first priority lien on all right, title and interest in and to the Wood River and Fairmont plants and any accounts receivable or property associated with those plants and a pledge of all of our equity interests in the Operating Subsidiaries. The Operating Subsidiaries have established collateral deposit accounts maintained by an agent of the banks, into which their revenues are deposited, subject to security interests to secure any outstanding obligations under the Senior Debt Facility. These funds are then allocated into various sweep accounts held by the collateral agent, including accounts that provide funds for the operating expenses of the Operating Subsidiaries. The collateral accounts have various provisions, including historical and prospective debt service coverage ratios and debt service reserve requirements, which determine whether there is, and the amount of, cash available to the LLC from the collateral accounts each month. The terms of the Senior Debt Facility also include covenants that impose certain limitations on, among other things, the ability of the Operating Subsidiaries to incur additional debt, grant liens or encumbrances, declare or pay dividends or distributions, conduct asset sales or other dispositions, merge or consolidate, and conduct transactions with affiliates. The terms of the Senior Debt Facility also include customary events of default including failure to meet payment obligations, failure to pay financial obligations when due, failure of the Operating Subsidiaries to remain solvent and failure to obtain or maintain required governmental approvals. Under the terms of separate management services agreements between our Operating Subsidiaries and the LLC, the Operating Subsidiaries were paying a monthly management fee of $884,000 to the LLC to cover salaries, rent, and other operating expenses of the LLC. Due to the Senior Debt Facility payment default, the lenders required the Operating Subsidiaries to reduce their monthly management fee to $260,000 per month effective October 2012.

Debt issuance fees and expenses of $7.9 million ($1.4 million, net of accumulated amortization as of March 31, 2013) have been incurred in connection with the Senior Debt Facility. These costs have been deferred and are being amortized and expensed as interest over the term of the Senior Debt Facility. 

Capital lease

The operating subsidiary that constructed the Fairmont plant, has entered into an agreement with the local utility pursuant to which the utility has built and owns and operates a substation and distribution facility in order to supply electricity to the plant. The operating subsidiary is paying a fixed facilities charge based on the cost of the substation and distribution facility of $34,000 per month, over the 30-year term of the agreement. This fixed facilities charge is being accounted for as a capital lease in the accompanying financial statements. The agreement also includes a $25,000 monthly minimum energy charge that also began in the first quarter of 2008.

Notes payable

Notes payable relate to certain financing agreements in place at our Wood River facility. The operating subsidiary entered into a note payable for $419,000 with the City of Wood River for special assessments related to street, water, and sanitary improvements at our Wood River facility. This note requires ten annual payments of $58,000, including interest at 6.5% per annum, and matures in 2018. In addition, the operating subsidiary for the Wood River facility entered into a financing agreement in the fourth quarter of 2012 for the purchase of certain rolling stock equipment to be used at the facility for $208,000. This note requires 24 monthly payments of $9,000, including interest at 6.0% per annum, and matures in 2014.

35

Tax increment financing

In February 2007, the operating subsidiary that constructed the Wood River plant received $6.0 million from the proceeds of a tax increment revenue note issued by the City of Wood River, Nebraska. The proceeds funded improvements to property owned by the operating subsidiary. The City of Wood River will pay the principal and interest of the note from the incremental increase in the property taxes related to the improvements made to the property. The interest rate on the note is 7.85%. The proceeds have been recorded as a liability which is reduced as the operating subsidiary remits property taxes to the City of Wood River, which began in 2008 and will continue through 2021. The LLC has guaranteed the principal and interest of the tax increment revenue note if, for any reason, the City of Wood River fails to make the required payments to the holder of the note or the operating subsidiary fails to make the required payments to the City of Wood River.

Off-balance sheet arrangements

Except for our operating leases, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Summary of critical accounting policies and significant estimates

The consolidated financial statements of BioFuel Energy Corp. included in this Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States. Note 2 to these consolidated financial statements contains a summary of our significant accounting policies, certain of which require the use of estimates and assumptions. Accounting estimates are an integral part of the preparation of financial statements and are based on judgments by management using its knowledge and experience about the past and current events and assumptions regarding future events, all of which we consider to be reasonable. These judgments and estimates reflect the effects of matters that are inherently uncertain and that affect the carrying value of our assets and liabilities, the disclosure of contingent liabilities and reported amounts of expenses during the reporting period.

The accounting estimates and assumptions discussed in this section are those that we believe involve significant judgments and the most uncertainty. Changes in these estimates or assumptions could materially affect our financial position and results of operations and are therefore important to an understanding of our consolidated financial statements.

36

Revenues

The Company sells its ethanol, distillers grain and corn oil products under the terms of marketing agreements. Revenue is recognized when risk of loss and title transfers upon shipment of ethanol, distillers grain or corn oil. In accordance with our marketing agreements, the Company records its revenues based on the amounts payable to us at the time of our sales of ethanol, distillers grain or corn oil. For our ethanol that is sold within the United States, the amount payable is equal to the average delivered price per gallon received by the marketing pool from Cargill’s customers, less average transportation and storage charges incurred by Cargill, and less a commission. We also sell a portion of our ethanol production to Cargill for export, which sales are shipped undenatured and are excluded from the marketing pool. For exported ethanol sales, the amount payable is equal to the contracted delivered price per gallon, less transportation and storage charges, and less a commission. The amount payable for distillers grain and corn oil is equal to the market price at the time of sale less a commission.

Recoverability of property, plant and equipment

The Company has two asset groups, its ethanol facility in Fairmont and its ethanol facility in Wood River, which are evaluated separately when considering whether the carrying value of these assets has been impaired. The Company continually monitors whether or not events or circumstances exist that would warrant impairment testing of its long-lived assets. In evaluating whether impairment testing should be performed, the Company considers several factors including the carrying value of its long-lived assets, projected production volumes at its facilities, projected ethanol and distillers grain prices that we expect to receive, and projected corn and natural gas costs we expect to incur. In the ethanol industry, operating margins, and consequently undiscounted future cash flows, are primarily driven by the crush spread. In the event that the crush spread is sufficiently depressed to result in negative operating cash flow at its facilities for an extended time period, the Company will evaluate whether an impairment of its long-lived assets may have occurred. Recoverability is measured by comparing the carrying value of an asset with estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved, quoted market prices or appraised values, depending on the nature of the assets. As of March 31, 2013, the Company performed an impairment evaluation of the recoverability of its long-lived assets due to marginal crush spreads. As a result of the impairment evaluation, it was determined that the future cash flows from the assets exceeded the carrying values, and therefore no further analysis was necessary and no impairment was recorded.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company regularly reviews historical and anticipated future pre-tax results of operations to determine whether the Company will be able to realize the benefit of its deferred tax assets. A valuation allowance is required to reduce the potential deferred tax asset when it is more likely than not that all or some portion of the potential deferred tax asset will not be realized due to the lack of sufficient taxable income. The most significant component of our deferred tax asset balance relates to our net operating loss and credit carryforwards. As the Company has incurred tax losses since its inception and expects to continue to incur tax losses for the foreseeable future, we will continue to provide a valuation allowance against deferred tax assets until the Company believes that such assets will be realized.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

37

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to significant risks relating to the prices of four primary commodities: corn and natural gas, our principal production inputs, and ethanol and distillers grain, our principal products. These commodities are also subject to geographic basis differentials, which can vary considerably. In recent years, ethanol prices have been primarily influenced by gasoline prices, the availability of other gasoline additives and federal, state and local laws, regulations, subsidies and tariffs. Distillers grain prices, though highly correlated to corn, tend to be influenced by the prices of alternative animal feeds.

We expect that lower ethanol prices will tend to result in lower profit margins even when corn prices decrease due to the significance of fixed costs. The price of ethanol is subject to wide fluctuations due to domestic and international supply and demand, infrastructure, government policies, including subsidies and tariffs, and numerous other factors. Ethanol prices are extremely volatile. From April 1, 2011 to March 31, 2013, the Chicago Board of Trade (“CBOT”) ethanol prices have fluctuated from a low of $1.97 per gallon in June 2012 to a high of $3.07 per gallon in July 2011 and averaged $2.44 per gallon during this period.

We expect that lower distillers grain prices, as a relative value to corn, will tend to result in lower profit margins. The selling prices we realize for our distillers grain are largely determined by market supply and demand, primarily from livestock operators and marketing companies in the U.S. and internationally. Distillers grain is sold by the ton and can either be sold “wet” or “dry”.

We anticipate that higher corn prices will tend to result in lower profit margins, as it is unlikely that such an increase in costs can be passed on to ethanol customers. The availability as well as the price of corn is subject to wide fluctuations due to weather, carry-over supplies from the previous year or years, current crop yields, government agriculture policies, international supply and demand and numerous other factors. Using recent corn prices of $7.20 per bushel, we estimate that corn will represent approximately 84% of our operating costs. Historically, the spot price of corn tends to rise during the spring planting season in April and May and tends to decrease during the fall harvest in October and November. From April 1, 2011 to March 31, 2013, the CBOT price of corn has fluctuated from a low of $5.56 per bushel in June 2012 to a high of $8.31 per bushel in August 2012 and averaged $6.92 per bushel during this period.

Higher natural gas prices will tend to reduce our profit margin, as it is unlikely that such an increase in costs can be passed on to ethanol customers. Natural gas prices and availability are affected by weather, overall economic conditions, oil prices and numerous other factors. Using recent corn prices of $7.20 per bushel and recent natural gas prices of $4.00 per Mmbtu, we estimate that natural gas will represent approximately 4% of our operating costs. Historically, the spot price of natural gas tends to be highest during the heating and cooling seasons and tends to decrease during the spring and fall. From April 1, 2011 to March 31, 2013, the New York Mercantile Exchange (“NYMEX”) price of natural gas has fluctuated from a low of $1.91 per Mmbtu in April 2012 to a high of $4.85 per Mmbtu in June 2011 and averaged $3.32 per Mmbtu during this period.

To reduce the risks implicit in price fluctuations of these four principal commodities and variations in interest rates, we plan to continuously monitor these markets and to hedge a portion of our exposure, provided we have the financial resources to do so. In hedging, we may buy or sell exchange-traded commodities futures or options, or enter into swaps or other hedging arrangements. While there is an active futures market for corn and natural gas, the futures market for ethanol is still relatively illiquid, and we do not believe a futures market for distillers grain currently exists. Although we will attempt to link our hedging activities such that sales of ethanol and distillers grain match pricing of corn and natural gas, there is a limited ability to do this against the current forward or futures market for ethanol and corn. Consequently, our hedging of ethanol and distillers grain may be limited or have limited effectiveness due to the nature of these markets. Due to the Company’s limited liquidity resources and the potential for required postings of significant cash collateral or margin deposits resulting from changes in commodity prices associated with hedging activities, the Company is currently able to engage in such hedging activities only on a limited basis. We also may vary the amount of hedging activities we undertake, and may choose to not engage in hedging transactions at all. As a result, our operations and financial position may be adversely affected by increases in the price of corn or natural gas or decreases in the price of ethanol or unleaded gasoline.

38

We have prepared a sensitivity analysis as set forth below to estimate our exposure to market risk with respect to our projected corn and natural gas requirements and our ethanol and distillers grain sales for the last nine months of 2013. Market risk related to these factors is estimated as the potential change in pre-tax income, resulting from a hypothetical 10% adverse change in each of our four primary commodities, independently, based on current prices as of March 31, 2013, excluding activity we may undertake related to forward and futures contracts used to hedge our market risk. The following amounts reflect the Operating Subsidiaries expected 2013 production, which assumes that our Wood River plant is operating the entire year and our Fairmont plant resumes normal operations in October 2013. Actual results may vary from these amounts due to various factors including significant increases or decreases in the Operating Subsidiaries production capacity during the last nine months of 2013.

	Volume		Units	Price per Unit at March 31, 2013		Hypothetical Adverse Change in Price			Change in Nine Months Ended December 31, 2013 Pre-tax Income
	(in millions)								(in millions)
Ethanol		114.7	Gallons	$	2.50		10	%	$	(28.7	)
Dry Distillers		0.1	Tons	$	255.00		10	%	$	(2.6	)
Wet Distillers		0.6	Tons	$	86.00		10	%	$	(5.2	)
Corn		40.6	Bushels	$	7.20		10	%	$	(29.2	)
Natural Gas		2.9	Mmbtu	$	4.00		10	%	$	(1.2	)

We are subject to interest rate risk in connection with our Senior Debt Facility. Under the facility, our bank borrowings bear interest at a floating rate based, at our option, on LIBOR or an alternate base rate. As of March 31, 2013, we had borrowed $170.5 million under our Senior Debt Facility. A hypothetical 100 basis points increase in interest rates under our Senior Debt Facility would result in an increase of $1,705,000 on our annual interest expense.

At March 31, 2013, we had $9.6 million of cash and cash equivalents invested in both standard cash accounts and money market mutual funds held at three financial institutions, which is in excess of FDIC insurance limits.

39

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures

The Company’s management carried out an evaluation, as required by Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this report. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to the Company and its consolidated subsidiaries required to be disclosed in our Exchange Act reports filed with the SEC (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In addition, the Company’s management carried out an evaluation, as required by Rule 13a-15(f) and 15d-15(f) of the Exchange Act, with the participation of our Chief Executive Officer and our Chief Financial Officer, of changes in the Company’s internal control over financial reporting. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that no change in internal control over financial reporting occurred during the quarter ended March 31, 2013, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

40

PART II.  OTHER INFORMATION

ITEM 6.       EXHIBITS

Number	Description
3.1	Amended and Restated Certificate of Incorporation of BioFuel Energy Corp. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed February 8, 2011).
3.2	Amended and Restated Bylaws of BioFuel Energy Corp dated March 20, 2009, (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed March 23, 2009).
10.1	Agreement dated as of April 11, 2013, by and among BFE Operating Company, LLC, Buffalo Lake Energy, LLC, Pioneer Trail Energy, LLC, the financial institutions party thereto and First National Bank of Omaha, a national banking association, as Escrow Agent and as administrative agent  and collateral agent  under that certain Credit Agreement dated as of September 25, 2006 referred to therein. *
10.2	Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions, dated as of April 11, 2013, among BFE Operating Company, LLC, Buffalo Lake Energy, LLC, Pioneer Trail Energy, LLC, the financial institutions party thereto and First National Bank of Omaha, a national banking association, as administrative agent and collateral agent under that certain Credit Agreement dated as of September 25, 2006 referred to therein.
31.1	Certification of the Company’s Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2	Certification of the Company’s Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1	Certification of the Company’s Chief Executive Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2	Certification of the Company’s Chief Financial Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
99.1	Press Release Announcing Results for the First Quarter of 2013.

* Pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, confidential portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission (“SEC”) pursuant to a Confidential Treatment Request filed with the SEC.,

41

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BIOFUEL ENERGY CORP.
	(Registrant)
Date: May 14, 2013	By:	/s/ Scott H. Pearce
		Scott H. Pearce
		President, Chief Executive Officer and Director
Date: May 14, 2013	By:	/s/ Kelly G. Maguire
		Kelly G. Maguire
		Executive Vice President and Chief Financial Officer

42

EX-10.1

Confidential treatment has been requested for this exhibit. The copy filed herewith omits the information subject to the confidentially request. Omissions are designated as ***. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

EXECUTION COPY

AGREEMENT

THIS AGREEMENT (this “Agreement”) is entered into as of April 11, 2013 by and among FIRST NATIONAL BANK OF OMAHA, a national banking association, as escrow agent (“Escrow Agent”), bfe operating company, llc, a Delaware limited liability company (“Opco”), BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company (“Buffalo Lake”), PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company (“Pioneer Trail”; Pioneer Trail, Buffalo Lake and Opco, each, a “Borrower” and, collectively, “Borrowers”), as borrowers, Opco, as Borrowers’ agent (“Borrowers’ Agent”), FIRST NATIONAL BANK OF OMAHA, a national banking association, as administrative agent under the Credit Agreement described below (“Administrative Agent”), and as collateral agent under the Credit Agreement (“Collateral Agent”; Collateral Agent and Administrative Agent, each, an “Agent” and, together, “Agents”), and the Lenders set forth on the signature pages hereto.

RECITALS:

A.      Pursuant to that certain Credit Agreement dated as of September 25, 2006 (as amended and supplemented from time to time, the “Credit Agreement”) among Borrowers, Borrowers’ Agent, Agents and various financial institutions, as lenders (together with their successors and assigns, the “Lenders”), the Lenders made certain loans to Borrowers (collectively, the “Loans”), subject to the terms and conditions set forth therein.

B.      The repayment of the Loans and the payment and performance of all other Obligations (as defined in the Credit Agreement) under the Credit Agreement are secured by, among other things, (i) that certain Future Advance Mortgage, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing dated as of September 25, 2006 (as amended and supplemented from time to time, the “Buffalo Lake Mortgage”) by Buffalo Lake in favor of Collateral Agent, and recorded in the Office of the County Recorder of Martin County, Minnesota on September 27, 2006 as Document No. 2006R-385938, encumbering certain real property owned by Buffalo Lake and located in Martin County, Minnesota, as more particularly described on Exhibit A attached hereto (the “Buffalo Lake Real Property”), (ii) that certain Fee Simple and Leasehold Deed of Trust, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing dated as of September 25, 2006 (as amended and supplemented from time to time, the “Pioneer Trail Mortgage,” and together with the Buffalo Lake Mortgage, the “Mortgages”) by Pioneer Trail in favor of First American Title Insurance Company, as trustee for the benefit of Collateral Agent, and recorded with the Register of Deeds for Buffalo County, Nebraska on December 21, 2006 as Instrument No. 2006-9710, and with the Register of Deeds for Hall County, Nebraska on October 3, 2006 as Instrument No. 0200608869, encumbering certain real property owned by Pioneer Trail and located in Buffalo County and Hall County, Nebraska, as more particularly described on Exhibit B attached hereto (the “Pioneer Trail Lake Real Property,” and together with the Buffalo Lake Real Property, the “Real Properties”), and (iii) certain other collateral assignments, security agreements and related documents in favor of Collateral Agent, for the benefit of Agents and the Lenders.

C.      Events of Default have occurred and are continuing under the Financing Documents (as defined in the Credit Agreement) as a result of, among other things, the failure of Borrowers to make the regularly scheduled payments of principal and interest due and payable in respect of the Loans from and after September 28, 2012 (the “Acknowledged Events of Default”). As a result of the Acknowledged Events of Default, Agents and the Lenders are presently entitled to exercise all available rights and remedies under the Financing Documents, including, without limitation, foreclosure of the Mortgages.

D.      Borrowers, Agents and the Lenders have entered into that certain Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions dated of even date herewith (the “Deed in Lieu Agreement”), pursuant to which, among other things, Borrowers have agreed to convey the Facilities (as defined in the Deed in Lieu Agreement) to the Acquiring Entities (as defined in the Deed in Lieu Agreement), as designees of Agents and the Lenders, and Agents and the Lenders have agreed to accept such conveyance, on the terms and conditions set forth in the Deed in Lieu Agreement and the other Deed in Lieu Documents (as defined in the Deed in Lieu Agreement), in lieu of Agents and the Lenders exercising their rights and remedies under the Financing Documents.

E.       Escrow Agent, Borrowers, Agents and the Lenders are entering into this Agreement to set forth, among other things, the terms and conditions upon which the Escrowed Documents and the Escrowed Funds (each as defined below) shall be held in escrow and released by Escrow Agent.

NOW, THEREFORE, in consideration of the above Recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by all parties, the parties agree as follows:

Section 1.     Recitals; Capitalized Terms. The Recitals set forth above are hereby incorporated into this Agreement by reference. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Deed in Lieu Agreement.

Section 2.      Escrowed Documents. Concurrently with the execution hereof, Borrowers, Lenders and Agents shall deliver to Escrow Agent fully-executed copies of this Agreement, the Deed in Lieu Agreement, the Deeds, the Bills of Sale, the Assignments of Leases and the Assignments of Contracts, receipt of which is hereby acknowledged by Escrow Agent. Administrative Agent and Borrowers shall from time to time hereafter deliver other Deed in Lieu Documents to Escrow Agent to be held in escrow in accordance with the terms of this Agreement. All Deed in Lieu Documents delivered to Escrow Agent by Administrative Agent or Borrower are referred to herein, collectively, as the “Escrowed Documents”.

The Escrowed Documents shall be held in escrow by Escrow Agent pending authorization by Administrative Agent to release the same as provided herein and in the Deed in Lieu Agreement in order to consummate the Closing. With respect to any Escrowed Documents that are not dated, Escrow Agent is hereby authorized and directed to date such Escrowed Documents as of the Closing Date. Escrow Agent shall not release any of the Escrowed Documents except as hereinafter provided without prior written authorization from Administrative Agent.

Section 3.     Escrowed Funds. Concurrently with the execution hereof, Borrowers shall (a) cause the Parent to deposit the sum of $938,000 (the “Escrow Deposit”) with Escrow Agent; provided Parent shall not have a claim against Borrower or its assets as a result of such deposit. Upon receipt of the Escrow Deposit, Escrow Agent shall deposit the Escrow Deposit in a separate interest bearing deposit account established by Escrow Agent (the “Escrow Account”), to be held and disbursed in accordance with the terms of this Agreement. In the event of a closing of a sale of the Facilities prior to the occurrence of a Release Event, Collateral Agent shall release its security interest upon the Escrow Account and the Escrow Deposit shall be returned by the Escrow Agent to the Parent.

Borrowers hereby grant to Collateral Agent, for the benefit of the Lenders, a security interest in the Escrow Account, the Escrow Deposit and all income or interest earned thereon (collectively, the “Escrowed Funds”) as security for the payment and performance of the Obligations, and Collateral Agent hereby appoints Escrow Agent as agent for Collateral Agent for purpose of perfecting such security interest in the Escrow Account and all Escrowed Funds therein. Escrow Agent hereby acknowledges receipt of the Escrow Funds, and agrees to hold and disburse the same in accordance with the terms and conditions of this Agreement.

Section 4.     Release Events. Effective upon the occurrence of either of the following events (each, a “Release Event”), as determined by Administrative Agent in its sole discretion, Administrative Agent may elect, in its sole discretion, to deliver to Escrow Agent written notice (such notice, the “Administrative Agent Instructions”) directing Escrow Agreement to, among other things, (a) release the Escrowed Documents to Administrative Agent (or, at the direction of Administrative Agent, to the Escrow Holder under the Deed in Lieu Agreement) in order to consummate the Closing and (b) disburse all Escrowed Funds to Administrative Agent:

(i)    the occurrence of any Default or Event of Default under the Financing Documents (other than the Acknowledged Events of Default); provided, however, in the event Borrowers’ fail to make the regularly scheduled payments of principal and interest due and payable in respect of the Loans on March 31, 2013 or June 30, 2013, the failure to make either such payment, while constituting an Event of Default pursuant to the Loans, shall not be a Release Event; or

(ii)   the failure of Borrowers to satisfy any of the requirements set forth in this Escrow Agreement (including on Schedule I attached hereto) (the “Escrow Obligations”) on or before the applicable deadline set forth therein; or

(iii)  the failure of Borrowers to deliver to Administrative Agent concurrently with the execution hereof, documents, certificates and/or opinions sufficient, in Administrative Agent’s sole discretion, to permit Administrative Agent to conclude that the transactions contemplated by the Deed in Lieu Agreement and this Agreement are supported by reasonably equivalent value and/or are supported by such facts that would prevent the transactions from being avoided, rescinded or set aside by a court of competent jurisdiction

Escrow Agent shall comply with the Administrative Agent Instructions, without the need for any instructions or consent from Borrowers, and notwithstanding any conflicting instructions from Borrowers or any other party. Without limitation of the foregoing, upon the occurrence of a Release Event and following the receipt by Escrow Agent of the Administrative Agent Instructions, (a) Escrow Agent shall release and distribute all Escrowed Documents and disburse the Escrowed Funds in accordance with the Administrative Agent Instructions, (b) all such Escrowed Documents shall be deemed released by each of the parties thereto and (c) all such Escrowed Documents (together with all covenants, agreements, representations and warranties of each of the parties thereto) shall be deemed released, delivered and in full force and effect.

Each Borrower hereby makes, constitutes and appoints Administrative Agent, its successors and assigns, as such Borrower’s true and lawful attorney, with full power of substitution and authority in the place and stead of such Borrower and in the name of such Borrower or in Administrative Agent’s own name, for the purpose of carrying out the terms of this Agreement and the Deed in Lieu Documents from and after the occurrence of a Release Event, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purpose of this Agreement and the Deed in Lieu Documents and to consummate the transactions contemplated hereby and thereby. Such power of attorney is coupled with an interest and shall be irrevocable following the occurrence of a Release Event.

Each Borrower hereby irrevocably authorizes and directs Escrow Agent to act and rely upon any Administrative Agent Instructions or other notices, instructions, demands or requests delivered by Administrative Agent to Escrow Agent hereunder or in connection with the transactions contemplated hereby or by the Deed in Lieu Documents. Escrow Agent shall be entitled to rely upon and will be protected in acting upon any Administrative Agent Instructions believed by it to be genuine and correct and to have been signed or sent on behalf of Administrative Agent, without any duty to make an investigation into the facts or matters stated therein.

Borrowers hereby agree, on a joint and several basis, to indemnify, defend and hold harmless Escrow Agent from and against any claim, loss, liability, damage or expense (including attorneys’ fees and costs) resulting from or attributable to (a) Escrow Agent’s acting upon unilateral Administrative Agent Instructions from Administrative Agent, (b) Escrow Agent’s failing to act upon any conflicting instructions from Borrowers or (c) Escrow Agent’s modifications to the Deed In Lieu Documents to exclude the Excluded Collateral in accordance with Section 7(a) of the Deed in Lieu Agreement, in each case, except to the extent attributable solely and directly to the gross negligence or willful misconduct of Agents or the Lenders.

Section 5.     Borrower Authorization. Borrowers hereby authorize Agents and Agents’ representatives, agents and designees to (a) disclose the conveyances, assignments and other transactions contemplated by the Deed in Lieu Documents to all creditors, vendors, suppliers and customers of Borrowers (collectively, the “Borrower Contacts”) and any Governmental Authorities (as defined in the Credit Agreement), (b) negotiate the terms of any contracts and agreements with any Borrower Contacts, including, without limitation, the Cargill Agreement, the Corn Oil Assignment and Assumption and the TIF Assumption and Modification Agreement, and amendments to any Facility Documents, in each case, to the extent contemplated hereby or deemed necessary or appropriate by Agents in connection with the transactions contemplated by the Deed in Lieu Documents or the operation of the Facilities subsequent to the Closing (provided that no such amendments or modifications to any Facility Documents shall be effective prior to the Closing without the written agreement of Borrowers, not to be unreasonably withheld) and (c) cause the transfer or replacement any Governmental Approvals (as defined in the Credit Agreement) for the Facilities to Acquiring Entities (provided that no such transfer or replacement shall be effective prior to the Closing Date). Borrowers hereby ratify and affirm the power-of-attorney granted by Borrowers in favor of Collateral Agent pursuant to Section 7.3(c) of the Credit Agreement, and acknowledge and agree that Collateral Agent may take any of the actions described in subclauses (a) through (c) of the immediately preceding sentence in Collateral Agent’s own name, or in any Borrower’s name pursuant to the exercise of such power-of-attorney.

Section 6.     Sale of Facilities. Borrowers shall use commercially reasonable efforts to market and solicit offers to purchase each of the Facilities in accordance with the terms set forth on Schedule I attached hereto. To assist with the sales effort, Borrowers shall employ an Independent Sales Advisor acceptable to Administrative Agent. The fees and expenses of the Independent Sales Advisor shall be paid by Borrowers with the consent of the Administrative Agent. The Independent Sales Advisor shall satisfy the qualifications of Independent Manager as set forth in each Borrower’s Operating Agreements. The Independent Sales Advisor shall accept, agree and acknowledge that he/she owes fiduciary duties to the each Borrower and each Borrower’s creditors (including the holders of the Obligations) and each Borrower shall cause the Independent Sales Agent to be fully informed of all of the plans, actions and efforts of each Borrower and the IB, as defined on Schedule I, regarding the efforts to market and solicit offers to purchase each of the Facilities. Specifically, each Borrower shall cause the Independent Sales Agent (i) to be invited to be present in all discussions with the IB and prospective purchasers; (ii) to receive copies of all materials distributed to prospective purchasers; (iii) to receive copies of all expressions of interest, letters of intent and offers delivered to Company or IB by prospective purchasers. Each Borrower agrees to receive and consider advice and recommendations made by the Independent Sales Agent. The Independent Sales Agent shall agree to keep the Administrative Agent fully informed of the Borrowers’ sales efforts and each Borrower agrees that the Administrative Agent shall have full access to the Independent Sales Agent for the purpose of the Administrative Agent fully understanding the status of the sales process and the Borrowers’ efforts in connection with the sales process.

Borrowers shall immediately deliver to Administrative Agent (a) copies of all marketing materials, letters of intent, purchase agreements and other documents relating to the sale of the Facilities and (b) such other documents, information and other items as Administrative Agent may request from time to time regarding Borrowers’ marketing and sale efforts with respect to the Facilities, and shall cause the officers of Borrowers to meet with Administrative Agent at such intervals as Administrative Agent may reasonably require to discuss such marketing and sale efforts. Nothing contained herein shall constitute an approval by any Agent or Lender of any sale of the Facilities, nor an agreement by any Agent or Lender to consent to the release of any lien or security interest of Collateral Agent on the Facilities in connection with any sale.

Each Borrower expressly agrees that neither the Administrative Agent nor any Lender has any duty or obligation to agree to a sale of one or both of the Facilities and a release of liens that does not result in the satisfaction in full of all Obligations. Each Borrower hereby waives any and all claims against Administrative Agent, each Lender and their respective agents and representatives in connection with a refusal by Administrative Agent and each Lender to approve a sale of one or both of the Facilities and a release of liens that does not result in the satisfaction in full of all Obligations.

In the event of a closing of a sale of the Facilities that (a) has been approved by Agents and each of the Lenders, in their sole and absolute discretion, (b) is otherwise in accordance with the terms of Schedule I attached hereto, (c) does not occur in connection with, or following the occurrence of, a bankruptcy proceeding with respect to BioFuel Energy Corp., BioFuel Energy, LLC, BFE Holdings, LLC or any Borrower or a foreclosure, trustee’s sale, deed in lieu of foreclosure or sale by a court appointed receiver with respect to either or both of the Facilities and (d) occurs prior to the occurrence of a Release Event with respect to which Administrative Agent shall have delivered to Escrow Agent the Administrative Agent Instructions in accordance herewith (any such sale satisfying each of the requirements in the foregoing subclauses (a) through (d), an “Approved Sale”), Agents, Lenders and Borrowers hereby acknowledge and agree that the proceeds of such sale shall be applied as set forth on the attached Schedule II.

Section 7.     Notices. Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered, (b) if mailed by United States Certified Mail (postage prepaid, return receipt requested), three (3) Business Days after mailing, (c) if by Federal Express or other reliable overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier on the day of transmission, if prior to 5:00 pm (recipient’s time) on a Business Day (otherwise, on the first Business Day following transmission), so long as copy is sent by overnight courier for delivery not later than the one (1) Business Day after the Business Day on which notice was given by telecopier, as set forth below.

If to Borrowers:

c/o BFE Operating Company, LLC
1600 Broadway, Suite 2200
Denver, Colorado 80202
Attention: Scott Pearce
Telephone: (303) 640-6500
Facsimile: (303) 592-8117

With copies to:

Arnold & Porter LLP

555 12^th Street
Washington, D.C. 20004
Attention: Michael L. Bernstein
Telephone: (202) 942-5577
Facsimile: (202) 942-5999

Arnold & Porter LLP

370 Seventeenth Street

Suite 4400
Denver, Colorado 80202
Attention: Timothy Macdonald
Telephone: (303) 863-2334
Facsimile: (303) 832-0438

If to Agents or the Lenders:

c/o First National Bank of Omaha, as Administrative Agent
1620 Dodge Street, Stop 1050
Omaha, Nebraska 68197
Attention: Brad Brummund
Telephone: (402) 602-3507
Facsimile: (402) 602-3056

With a copy to:

Kutak Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
Attention: Jeff Wegner
Telephone: (402) 346-6000
Facsimile: (402) 346-1148

If to Escrow Agent:

First National Bank of Omaha, as Escrow Agent
1620 Dodge Street, Stop 1050
Omaha, Nebraska 68197
Attention: Brad Brummund
Telephone: (402) 602-3507
Facsimile: (402) 602-3056

or at such other address as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.

Section 8.      Conflict. In the event of any conflict between the terms of this Agreement and the terms of any of the Deed in Lieu Documents, the terms of this Agreement shall control.

Section 9.     Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS 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).

Section 10.   WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

Section 11.   Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute one and the same instrument. An electronically delivered counterpart shall be equivalent for all purposes to a counterpart bearing an original signature. Any party delivering an executed counterpart of this Agreement by electronic transmission shall deliver a counterpart bearing an original signature to the other parties within a reasonable period of time following the electronic delivery, provided that failure to deliver the counterpart bearing the original signature shall not affect the enforceability of this Agreement.

Section 12.   Entire Agreement; Time is of the Essence. This Agreement and the Deed in Lieu Documents contain the entire agreement among Escrow Agent, Borrowers, Agents and the Lenders with respect to the subject matter hereof and thereof, and any prior representations, negotiations or agreements between or among the parties hereto are merged into this Agreement and the Deed in Lieu Documents. Time is of the essence of this Agreement.

Section 13.   Severability. If any of the provisions of this Agreement, or the application thereof to any person, party or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such provision or provisions to persons, parties or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and every provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

Section 14.   Amendments; Survival. This Agreement may not be amended except by an amendment in writing signed by all parties hereto; provided, however, that (a) Administrative Agent may elect to waive any term or condition set forth on Schedule I attached hereto, in its sole and absolute discretion, and (b) Administrative Agent and Borrowers may agree to amend Schedule I hereto from time to time without the consent of Escrow Agent, the Lenders or any other party. Administrative Agent and Borrowers shall deliver to Escrow Agent and the Lenders a copy of any amendment to Schedule I hereto promptly following the execution thereof. No delay on the part of any Agent or Lender in the exercise of any right or remedy under this Agreement, any of the Deed in Lieu Documents or any of the Financing Documents shall operate as a waiver thereof. No single or partial exercise by any Agent or Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. This Agreement and the covenants, representations, warranties, indemnities, releases, waivers, and other rights and obligations contained herein shall survive the Closing.

Section 15.   Further Assurances. At any time or from time to time upon the request of Administrative Agent or Escrow Agent, Borrowers shall execute all such additional documents, instruments and estoppel certificates and shall do all such additional acts and things reasonably requested by Administrative Agent or Escrow Agent in order to fully confer upon the Agents and the Lenders the intended benefits of this Agreement.

Section 16.    Escrow Agent Resignation and Replacement. Escrow Agent may at any time resign by giving notice to Borrower and Administrative Agent of its intention to resign and of the proposed date of resignation, which shall be a date not less than 5 days after such notice is delivered in the manner provided in Section 7 above, unless an earlier resignation date and the appointment of a successor Escrow Agent shall have been approved by Administrative Agent. Borrowers and Administrative Agent may at any time designate a party to serve as a replacement Escrow Agent under this Agreement (a “Replacement Escrow Agent”), which Replacement Escrow Agent must be acceptable to Administrative Agent in its sole discretion. Any such replacement of Escrow Agent shall not be deemed to affect the rights or obligations of the parties hereunder. Upon any such replacement, Escrow Agent agrees to assign to such Replacement Escrow Agent its rights under this Agreement.

Section 17.   Borrower Release. Each Borrower hereby fully, finally and forever releases, acquits and discharges (a) Escrow Agent and each Agent and Lender, (b) the predecessors in interest, successors, assigns and affiliates of Escrow Agent and each Agent and Lender and (c) the directors, officers, employees, agents and representatives of Escrow Agent and each Agent and Lender (collectively, the “Released Parties”), from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, contracts, agreements, accounts, defenses, suits and offsets of whatever kind, character or nature whatsoever, in law or equity, contract or in tort, that any Borrower has or in the future may have, whether known or unknown, suspected or unsuspected, for or by reason of any matter, cause or thing whatsoever, arising under that certain letter agreement dated on or about the date hereof among Borrowers, BioFuel Energy Corp. and Piper Jaffray & Co. or otherwise in respect of the IB Engagement (as defined on Schedule I attached hereto) or the transactions contemplated hereby or thereby; provided, however, that the foregoing release shall not be construed as a waiver or release of the agreements of Agents or the Lenders under Section 6 hereof relating to the application of the proceeds of an Approved Sale.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

EXECUTION PAGES FOLLOW]

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto the day and year first above written.

ADMINISTRATIVE AGENT AND COLLATERAL AGENT:
FIRST NATIONAL BANK OF OMAHA, a national banking association, as Administrative Agent and Collateral Agent
By:	/s/ Andrew Wong
Name:	Andrew Wong
Title:	Vice President
BORROWERS AND BORROWERS’ AGENT:
BFE OPERATING COMPANY, a Delaware limited liability company, as Borrower and as Borrowers’ Agent
By:	/s/ Scott H. Pearce
Name:	Scott H. Pearce
Title:	Authorized Person
BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company, as Borrower
By:	/s/ Scott H. Pearce
Name:	Scott H. Pearce
Title:	Authorized Person
PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company, as Borrower
By:	/s/ Scott H. Pearce
Name:	Scott H. Pearce
Title:	Authorized Person

[EXECUTION PAGE OF ESCROW AGREEMENT]

ESCROW AGENT:

FIRST NATIONAL BANK OF OMAHA, a national banking association, as Escrow Agent

By:

Name:

Title:

[EXECUTION PAGE OF ESCROW AGREEMENT]

LENDERS:

FIRST NATIONAL BANK OF OMAHA, as Lender

By:  

Name:  

Title:  

STANDARD CHARTERED BANK, as Lender

By:  

Name:  

Title:  

AGFIRST FARM CREDIT BANK,  as Lender

By:  

Name:  

Title:  

FARM CREDIT BANK OF TEXAS, as Lender

By:  

Name:  

Title:  

FCS FINANCIAL, FLCA, as Lender

By:  

Name:  

Title:  

TPG CREDIT STRATEGIES FUND, L.P., as Lender

By:  

Name:  

Title:  

[EXECUTION PAGE OF ESCROW AGREEMENT]

TPG CREDIT STRATEGIES FUND II, L.P., as Lender

By:

Name:

Title:

AMARILLO NATIONAL BANK, as Lender

By:

Name:

Title:

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

By:

Name:

Title:

[EXECUTION PAGE OF ESCROW AGREEMENT]

Confidential treatment has been requested for this exhibit. The copy filed herewith omits the information subject to the confidentially request. Omissions are designated as ***. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

SCHEDULE I

* * *

Confidential treatment has been requested for this exhibit. The copy filed herewith omits the information subject to the confidentially request. Omissions are designated as ***. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

SCHEDULE II

 * * *

EX-10.2

EXECUTION COPY

DEED IN LIEU OF FORECLOSURE AGREEMENT

AND

JOINT ESCROW INSTRUCTIONS

dated as of April 11, 2013

among

BFE OPERATING COMPANY, LLC,

BUFFALO LAKE ENERGY, LLC,

and

PIONEER TRAIL ENERGY, LLC,

as Borrowers,

BFE OPERATING COMPANY, LLC,

as Borrowers’ Agent,

FIRST NATIONAL BANK OF OMAHA,

as Administrative Agent and Collateral Agent,

and

THE LENDERS IDENTIFIED HEREIN

DEED IN LIEU OF FORECLOSURE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS

This Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions (this “Agreement”) is entered into as of April 11, 2013 (the “Effective Date”), by and among bfe operating company, llc, a Delaware limited liability company (“Opco”), BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company (“Buffalo Lake”), PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company (“Pioneer Trail”; Pioneer Trail, Buffalo Lake and Opco, each, a “Borrower” and, collectively, “Borrowers”), as borrowers, Opco, as Borrowers’ agent (“Borrowers’ Agent”), FIRST NATIONAL BANK OF OMAHA, a national banking association, as administrative agent under the Credit Agreement described below (“Administrative Agent”), and as collateral agent under the Credit Agreement (“Collateral Agent”; Collateral Agent and Administrative Agent, each, an “Agent” and, together, “Agents”), and the Lenders set forth on the signature pages hereto.

RECITALS:

A.                Pursuant to that certain Credit Agreement dated as of September 25, 2006 (as amended and supplemented from time to time, the “Credit Agreement”) among Borrowers, Borrowers’ Agent, Agents and various financial institutions, as lenders (together with their successors and assigns, the “Lenders”), the Lenders made certain loans to Borrowers (collectively, the “Loans”), subject to the terms and conditions set forth therein.

B.                The repayment of the Loans and the payment and performance of all other Obligations (as defined in the Credit Agreement) under the Credit Agreement are secured by, among other things, (i) that certain Future Advance Mortgage, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing dated as of September 25, 2006 (as amended and supplemented from time to time, the “Buffalo Lake Mortgage”) by Buffalo Lake in favor of Collateral Agent, and recorded in the Office of the County Recorder of Martin County, Minnesota on September 27, 2006 as Document No. 2006R-385938, encumbering certain real property owned by Buffalo Lake and located in Martin County, Minnesota, as more particularly described on Exhibit A attached hereto (the “Buffalo Lake Real Property”), (ii) that certain Fee Simple and Leasehold Deed of Trust, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing dated as of September 25, 2006 (as amended and supplemented from time to time, the “Pioneer Trail Mortgage,” and together with the Buffalo Lake Mortgage, the “Mortgages”) by Pioneer Trail in favor of First American Title Insurance Company, as trustee for the benefit of Collateral Agent, and recorded with the Register of Deeds for Buffalo County, Nebraska on December 21, 2006 as Instrument No. 2006-9710, and with the Register of Deeds for Hall County, Nebraska on October 3, 2006 as Instrument No. 0200608869, encumbering certain real property owned by Pioneer Trail and located in Buffalo County and Hall County, Nebraska, as more particularly described on Exhibit B attached hereto (the “Pioneer Trail Lake Real Property,” and together with the Buffalo Lake Real Property, the “Real Properties”), and (iii) certain other collateral assignments, security agreements and related documents in favor of Collateral Agent, for the benefit of Agents and the Lenders.

C.                Events of Default have occurred and are continuing under the Financing Documents (as defined in the Credit Agreement) as a result of, among other things, the failure of Borrowers to make the regularly scheduled payments of principal and interest due and payable in respect of the Loans from and after September 28, 2012 (the “Acknowledged Events of Default”). As a result of the Acknowledged Events of Default, Agents and the Lenders are presently entitled to exercise all available rights and remedies under the Financing Documents, including, without limitation, foreclosure of the Mortgages against the Facilities (as hereafter defined).

D.                On account of the Acknowledged Events of Default, Borrowers have agreed to convey the Facilities to the Acquiring Entities (as hereafter defined), as designees of Agents and the Lenders, and the Acquiring Entities have agreed to accept the Facilities, on the terms and conditions set forth in this Agreement and the other Deed in Lieu Documents (as hereafter defined), in lieu of Agents and the Lenders exercising their rights and remedies under the Financing Documents.

AGREEMENT:

In consideration of the promises, agreements, covenants and undertakings contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, the parties hereto hereby agree as follows:

1.Definitions. As used in this Agreement, the terms set forth below shall have the following meanings:

“Acquiring Entity Credit Facility” means a credit facility among the Acquiring Entities, as borrowers, Acquiring Entity Credit Facility Agent, First National Bank of Omaha, as collateral agent, and the Lenders party thereto, as lenders.

“Acquiring Entity Credit Facility Agent” First National Bank of Omaha, in its capacity as agent under the Acquiring Entity Credit Facility.

“Acquiring Entities” means, collectively, the Buffalo Lake Acquiring Entity, the Pioneer Trail Acquiring Entity and the Opco Acquiring Entity.

“Asset Retirement Obligations” means, collectively, (a) the restoration, removal and indemnity obligations under Section 7 of Exhibit B of the Union Pacific Agreement, (b) all obligations under Section 12.01 of each of the Grain Facility Leases relating to the removal of any Alterations (as defined in the Grain Facility Leases), and (c) all reporting, restoration, removal, monitoring, well or tank capping or sealing and inspection obligations under the Water Appropriation Permit issued by the Minnesota Department of Natural Resources with respect to the Buffalo Lake Facility and the Permit for Storage of Liquid Substances at a Major Aboveground Storage Tank Facility issued by the Minnesota Pollution Control Agency with respect to the Buffalo Lake Facility.

“Assignments of Contracts” means, collectively, the Assignments of Contracts made by Buffalo Lake to the Buffalo Lake Acquiring Entity, by Pioneer Trail to the Pioneer Trail Acquiring Entity and by Opco to the Opco Acquiring Entity, in the form attached as Exhibit C to this Agreement, and “Assignment of Contracts” means each such Assignment of Contracts, individually.

2

“Assignments of Leases” means, together, the Assignments of Leases made by Buffalo Lake to the Buffalo Lake Acquiring Entity and by Pioneer Trail to the Pioneer Trail Acquiring Entity, in the form attached as Exhibit D to this Agreement, and “Assignment of Leases” means each such Assignment of Leases, individually.

“BFE” means BioFuel Energy, LLC, a Delaware limited liability company.

“BFE Sublease Assignment” means, collectively, (a) an Assignment and Assumption Agreement with respect to each of the BFE Subleases, pursuant to which, among other things, BFE assigns all of its right, title and interest under the applicable BFE Sublease to Buffalo Lake or Pioneer Trail, as the case may be, and (b) a written consent and acknowledgement by TransMontaigne Product Services Inc. with respect to the Assignment and Assumption Agreements described in the foregoing subclause (a), in each case, in form and substance acceptable to Administrative Agent.

“BFE Subleases” means, together, (a) that certain Rail Car Use Agreement dated as of April 3, 2012 between BFE and TransMontaigne Product Services Inc. and (b) that certain Rail Car Use Agreement dated as of June 25, 2012 between BFE and TransMontaigne Product Services Inc.

“Bills of Sale” means, collectively, the Bills of Sale made by Buffalo Lake to the Buffalo Lake Acquiring Entity, by Pioneer Trail to the Pioneer Trail Acquiring Entity and by Opco to the Opco Acquiring Entity, in the form attached as Exhibit E to this Agreement, and “Bill of Sale” means each such Bill of Sale, individually.

“Buffalo Lake Acquiring Entity” means a wholly-owned subsidiary of Opco Acquiring Entity, as designee of the Agents and the Lenders for purposes of acquiring the Buffalo Lake Facility.

“Buffalo Lake Architect’s Agreements and Plans” means all agreements with architects who prepared architectural plans relating to the Buffalo Lake Facility, together with all of the architectural plans and specifications and all supplements, amendments and modifications to the foregoing.

“Buffalo Lake Engineer’s Agreements and Plans” means all engineering agreements with engineers who prepared engineering plans relating to the Buffalo Lake Facility, together with all of the engineering plans and specifications and all supplements, amendments and modifications to the foregoing.

“Buffalo Lake Facility” means, collectively, the Buffalo Lake Real Property, the Buffalo Lake Leases, the Buffalo Lake Improvements and the Buffalo Lake Personal Property.

“Buffalo Lake Facility Contracts” means all of Buffalo Lake’s rights under (a) all construction contracts, architect’s agreements and engineer’s agreements relating to the Buffalo Lake Facility, together with all supplements, amendments and modifications thereto, (b) all insurance policies, warranties, guaranties, bonds, and other contracts or agreements relating to the Buffalo Lake Facility, together with all supplements, amendments and modifications thereto, (c) the Buffalo Lake Architect’s Agreements and Plans, and (d) the Buffalo Lake Engineer’s Agreements and Plans.

3

“Buffalo Lake Facility Documents” means all Buffalo Lake Leases, Buffalo Lake Licenses, Authorizations and Permits, Buffalo Lake Facility Contracts, Buffalo Lake Records and Plans and Buffalo Lake Service Contracts.

“Buffalo Lake Improvements” means all buildings, fixtures, fences, parking areas, systems, and other improvements, including facilities used to provide any utility or other services, located at or installed on the Buffalo Lake Real Property.

“Buffalo Lake Leases” mean, collectively, all leases, subleases, licenses, concessions, work letter agreements, improvement agreements, or other agreement related to the occupancy or right of use of any portion of the Buffalo Lake Facility, and any guaranty thereof, now or hereafter entered into, together with any and all guaranties, extensions and renewals thereof and all supplements, amendments and modifications thereto, and “Buffalo Lake Lease” means each such Buffalo Lake Lease, individually.

“Buffalo Lake Licenses, Authorizations and Permits” means all licenses, permits, certificates of occupancy, approvals, authorizations, dedications, subdivision maps, development rights and entitlements issued, approved or granted by governmental agencies in connection with the Buffalo Lake Facility, including, without limitation, all Governmental Approvals issued under Environmental Law (as such terms are defined in the Credit Agreement), and all licenses, authorizations, consents, easements, rights of way and approvals required from private parties to make use of utilities and to insure vehicular and pedestrian ingress and egress to the Buffalo Lake Facility.

“Buffalo Lake Personal Property” means all tangible and intangible personal property and fixtures owned by Buffalo Lake, and includes, without limitation: (a) all tangible and intangible personal property owned by Buffalo Lake and used in connection with the operation, maintenance, use or occupancy of the Buffalo Lake Facility, including the items of personal property described on Schedule I attached hereto, (b) the Buffalo Lake Licenses, Authorizations and Permits, Buffalo Lake Facility Contracts and Buffalo Lake Records and Plans, (c) any and all unreturned and unapplied deposits or prepayments, of any type and for any purpose, made by or in the possession of Buffalo Lake or anyone on its behalf, including, without limitation, any and all utility deposits held by any utility companies and insurance premiums, (d) any and all proceeds or rights to proceeds in any threatened or pending condemnation proceedings or proceedings in lieu thereof, (e) any and all causes of action of Buffalo Lake against anyone now existing or hereafter arising and (f) all goodwill, copyrights, patents and trademarks, all licenses in respect of the foregoing, and all income, royalties, proceeds and other rights arising from or asserted under the foregoing; provided, however, that the Buffalo Lake Personal Property shall not include any Excluded Assets.

“Buffalo Lake Records and Plans” means all financial and other books and records maintained in connection with the operation or development of the Buffalo Lake Facility, and all surveys, structural reviews, architectural drawings and plans, and engineering, soils, seismic, geologic, environmental and architectural reports, studies, tests and plans and certificates and other documents pertaining to the Buffalo Lake Facility.

4

“Buffalo Lake Service Contracts” means all equipment leases, railcar leases and subleases, maintenance, service, sales and supply contracts, brokerage agreements, parking agreements, consultant’s agreements, management contracts (other than the Management Services Agreements, as defined in the Credit Agreement), and similar agreements for equipment or services relating to or required for the use, occupancy or operation of the Buffalo Lake Facility, together with all supplements, amendments and modifications thereto.

“Buffalo Lake Title Policy” means, with respect to the Buffalo Lake Real Property, an ALTA Owner’s Policy of Title Insurance, with all endorsements required by Administrative Agent attached thereto, naming the Buffalo Lake Acquiring Entity as the insured, in a policy amount to be specified by Administrative Agent, insuring fee simple title to the Buffalo Lake Real Property (and, as applicable, insuring the leasehold interest with respect to any portion of the Buffalo Lake Real Property in which Buffalo Lake holds a leasehold interest), subject only to those matters acceptable to Administrative Agent in its sole discretion.

“Cargill Agreement” means an agreement, or a term sheet setting forth the definitive terms of an agreement to be entered into, among the Acquiring Entities, Cargill, Incorporated and certain affiliates of Cargill, Incorporated relating to the terms of the existing Facility Leases with Cargill, Incorporated and corn supply, elevator rent, corn put-through and ethanol marketing terms for the Facilities, in form and substance acceptable to Administrative Agent.

“Collateral” means has the meaning assigned to such term in the Credit Agreement, and includes, without limitation, the Facilities.

“Corn Oil Leases” means, together, (a) that certain Lease Agreement dated October 5, 2011 between Farnam Street Financial, Inc., as lessor, and Buffalo Lake, as lessee, and (b) that certain Lease Agreement dated October 5, 2011 between Farnam Street Financial, Inc., as lessor, and Pioneer Trail, as lessee.

“Corn Oil Assignment and Assumption” means an agreement among the Acquiring Entities, and Farnam Street Financial, Inc., in form and substance acceptable to Administrative Agent, pursuant to which the Acquiring Entities assume the obligations under the Corn Oil Leases.

“Deeds” means, together, the Deeds in Lieu of Foreclosure made by Buffalo Lake to the Buffalo Lake Acquiring Entity and by Pioneer Trail to the Pioneer Trail Acquiring Entity, in the form attached as Exhibit F to this Agreement, and “Deed” means each such Deed in Lieu of Foreclosure, individually.

“Deed in Lieu Documents” means this Agreement, the Assignment of Contracts, the Assignments of Leases, the Bills of Sale, the Deeds and the other documents executed in connection herewith.

5

“Escrow Holder” means TitleCore, LLC, or any other escrow holder selected by Administrative Agent.

“Excluded Assets” means, collectively, the assets described on Schedule X attached hereto.

“Facility” means the Buffalo Lake Facility or the Pioneer Trail Facility, individually, and “Facilities” means, together, the Buffalo Lake Facility and the Pioneer Trail Facility

“Facility Documents” means, collectively, all Buffalo Lake Facility Documents, Pioneer Trail Facility Documents and Opco Facility Contracts.

“Kinder Morgan Agreement” means that certain Precedent Agreement dated May 4, 2007 between Kinder Morgan Interstate Gas Transmission LLC and Pioneer Trail.

“Kinder Morgan Deposit” means that certain security deposit held by Kinder Morgan, in the amount of $2,155,288, as security for the obligations of Pioneer Trail under the Kinder Morgan Agreement.

“Opco Acquiring Entity” means a designee of the Agents and the Lenders for purposes of acquiring the Opco Personal Property.

“Opco Facility Contracts” means all of Opco’s rights under (a) all construction contracts, architect’s agreements, engineer’s agreements, together with all supplements, amendments and modifications thereto, (b) all insurance policies, warranties, guaranties, bonds, and other contracts or agreements relating to either Facility, together with all supplements, amendments and modifications thereto, (c) the Buffalo Lake Architect’s Agreements and Plans and Pioneer Trail Architect’s Agreements and Plans, and (d) the Buffalo Lake Engineer’s Agreements and Plans and Pioneer Trail Engineer’s Agreements and Plans.

“Opco Personal Property” means all tangible and intangible personal property and fixtures owned by Opco, and includes, without limitation: (a) all tangible and intangible personal property owned by Opco and used in connection with the operation, maintenance, use or occupancy of either Facility, including the items of personal property described on Schedule II attached hereto, (b) the Opco Facility Contracts, (c) any and all unreturned and unapplied deposits or prepayments, of any type and for any purpose, made by or in the possession of Opco or anyone on its behalf, including, without limitation, any and all utility deposits held by any utility companies and insurance premiums, (d) any and all proceeds or rights to proceeds in any threatened or pending condemnation proceedings or proceedings in lieu thereof, (e) any and all causes of action of Opco against anyone now existing or hereafter arising and (f) all goodwill, copyrights, patents and trademarks, all licenses in respect of the foregoing, and all income, royalties, proceeds and other rights arising from or asserted under the foregoing; provided, however, that the Opco Personal Property shall not include any Excluded Assets.

“Parent” means Biofuel Energy Corp., a Delaware corporation.

“Payment Schedule” has the meaning assigned to such term in Section 9 hereof.

6

“Personal Property” means, collectively, the Buffalo Lake Personal Property, the Pioneer Trail Personal Property and the Opco Personal Property.

“Pioneer Trail Acquiring Entity” means a wholly-owned subsidiary of Opco Acquiring Entity, as designee of the Agents and the Lenders for purposes of acquiring the Pioneer Trail Facility.

“Pioneer Trail Architect’s Agreements and Plans” means all agreements with architects who prepared architectural plans relating to the Pioneer Trail Facility, together with all of the architectural plans and specifications and all supplements, amendments and modifications to the foregoing.

“Pioneer Trail Engineer’s Agreements and Plans” means all engineering agreements with engineers who prepared engineering plans relating to the Pioneer Trail Facility, together with all of the engineering plans and specifications and all supplements, amendments and modifications to the foregoing.

“Pioneer Trail Facility” means, collectively, the Pioneer Trail Real Property, the Pioneer Trail Leases, the Pioneer Trail Improvements and the Pioneer Trail Personal Property.

“Pioneer Trail Facility Contracts” means all of Pioneer Trail’s rights under (a) all construction contracts, architect’s agreements engineer’s agreements relating to the Pioneer Trail Facility, together with all supplements, amendments and modifications thereto, (b) all insurance policies, warranties, guaranties, bonds, and other contracts or agreements relating to the Pioneer Trail Facility, together with all supplements, amendments and modifications thereto, (c) the Pioneer Trail Architect’s Agreements and Plans, and (d) the Pioneer Trail Engineer’s Agreements and Plans.

“Pioneer Trail Facility Documents” means all Pioneer Trail Leases, Pioneer Trail Licenses, Authorizations and Permits, Pioneer Trail Facility Contracts, Pioneer Trail Records and Plans and Pioneer Trail Service Contracts.

“Pioneer Trail Improvements” means all buildings, fixtures, fences, parking areas, systems, and other improvements, including facilities used to provide any utility or other services, located at or installed on the Pioneer Trail Real Property.

“Pioneer Trail Leases” mean, collectively, all leases, subleases, licenses, concessions, work letter agreements, improvement agreements, or other agreement related to the occupancy or right of use of any portion of the Pioneer Trail Facility, and any guaranty thereof, now or hereafter entered into, together with any and all guaranties, extensions and renewals thereof and all supplements, amendments and modifications thereto, and “Pioneer Trail Lease” means each such Pioneer Trail Lease, individually.

“Pioneer Trail Licenses, Authorizations and Permits” means all licenses, permits, certificates of occupancy, approvals, authorizations, dedications, subdivision maps, development rights and entitlements issued, approved or granted by governmental agencies in connection with the Pioneer Trail Facility, including, without limitation, all Governmental Approvals issued under Environmental Law (as such terms are defined in the Credit Agreement), and all licenses, consents, authorizations, easements, rights of way and approvals required from private parties to make use of utilities and to insure vehicular and pedestrian ingress and egress to the Pioneer Trail Facility.

7

“Pioneer Trail Personal Property” means all tangible and intangible personal property and fixtures owned by Pioneer Trail, and includes, without limitation: (a) all tangible and intangible personal property owned by Pioneer Trail and used in connection with the operation, maintenance, use or occupancy of the Pioneer Trail Facility, including the items of personal property described on Schedule III attached hereto, (b) the Pioneer Trail Licenses, Authorizations and Permits, Pioneer Trail Facility Contracts and Pioneer Trail Records and Plans, (c) any and all unreturned and unapplied deposits or prepayments, of any type and for any purpose, made by or in the possession of Pioneer Trail or anyone on its behalf, including, without limitation, any and all utility deposits held by any utility companies and insurance premiums, (d) any and all proceeds or rights to proceeds in any threatened or pending condemnation proceedings or proceedings in lieu thereof, (e) any and all causes of action of Pioneer Trail against anyone now existing or hereafter arising and (f) all goodwill, copyrights, patents and trademarks, all licenses in respect of the foregoing, and all income, royalties, proceeds and other rights arising from or asserted under the foregoing; provided, however, that the Pioneer Trail Personal Property shall not include any Excluded Assets.

“Pioneer Trail Records and Plans” means all financial and other books and records maintained in connection with the operation or development of the Pioneer Trail Facility, and all surveys, structural reviews, architectural drawings and plans, and engineering, soils, seismic, geologic, environmental and architectural reports, studies, tests and plans and certificates and other documents pertaining to the Pioneer Trail Facility.

“Pioneer Trail Service Contracts” means all equipment leases, railcar leases and subleases, maintenance, service, sales and supply contracts, brokerage agreements, parking agreements, consultant’s agreements, management contracts (other than the Management Services Agreements), and similar agreements for equipment or services relating to or required for the use, occupancy or operation of the Pioneer Trail Facility, together with all supplements, amendments and modifications thereto.

“Pioneer Trail Title Policy” means, with respect to the Pioneer Trail Real Property, an ALTA Owner’s Policy of Title Insurance, with all endorsements required by Administrative Agent attached thereto, naming the Pioneer Trail Acquiring Entity as the insured, in a policy amount to be specified by Administrative Agent, insuring fee simple title to the Pioneer Trail Real Property (and, as applicable, insuring the leasehold interest with respect to any portion of the Pioneer Trail Real Property in which Pioneer Trail holds a leasehold interest), subject only to those matters acceptable to Administrative Agent in its sole discretion.

“Redevelopment Contract” means the Redevelopment Contract dated as of November 2, 2006 between The City of Wood River and Nebraska and Pioneer Trail.

“Rents” means all sums payable pursuant to the Leases in the nature of “rent”, “fixed rent”, “base rent”, “additional rent”, “percentage rent”, “common area maintenance or administrative charges”, “real estate taxes”, “insurance premiums”, or otherwise with respect to the use and occupancy of all or any portion of a Facility.

8

“Service Contracts” means, collectively, the Buffalo Lake Service Contracts and the Pioneer Trail Service Contracts.

“Tenant” means any lessee, sublessee, tenant, licensee, occupant, concessionaire or other party in a similar capacity under a Lease.

“TIF Assumption and Modification Agreement” means an agreement, in form and substance acceptable to Administrative Agent in its sole discretion, among The City of Wood River, Nebraska, Pioneer Trail, the Pioneer Trail Acquisition Entity, BioFuel Energy, LLC and Platte Valley State Bank & Trust Company, pursuant to which, among other things, (a) the payment terms of the TIF Indebtedness (as defined in the Redevelopment Contract) in respect of Series A (as described in Exhibit C of the Redevelopment Contract) are modified, (b) the TIF Indebtedness in respect of Series B (as described in Exhibit C of the Redevelopment Contract) is cancelled and all instruments evidencing are surrendered, with any amounts previously paid into escrow being disbursed to the Acquiring Entity Credit Facility Agent, (c) the Pioneer Trail Acquiring Entity assumes the payment obligations in respect of the Series A TIF Indebtedness and (d) BioFuel Energy, LLC ratifies its continuing obligations under its guaranty of the TIF Indebtedness.

“Title Company” means Commonwealth Land Title Insurance Company, or any other title insurance company selected by the Agent and Lenders.

“Title Policies” means, together, the Buffalo Lake Title Policy and the Pioneer Trail Policy.

“UCC” means the Uniform Commercial Code as enacted in the State of Delaware, or in such other jurisdictions as may be applicable to the transactions described in this Agreement.

“Union Pacific Agreement” means that certain Agreement dated as of March 13, 2008 by and between Union Pacific Railroad Company and Pioneer Trail.

2.Closing Date; Conveyance.

(a)Closing. The closing (the “Closing”) of the transactions described in this Agreement shall occur on such date as Administrative Agent shall designate after Administrative Agent’s determination, in its sole discretion, that the conditions set forth in Section 9 hereof have been satisfied (or waived by Administrative Agent) (the “Closing Date”). The Closing shall be effected through an escrow (the “Escrow”) with Escrow Holder.

(b)Buffalo Lake Conveyance. Buffalo Lake hereby agrees to (a) grant, convey and transfer to the Buffalo Lake Acquiring Entity (i) fee simple title to the Buffalo Lake Real Property and the Buffalo Lake Improvements (or its leasehold interest, with respect to any portion of the Buffalo Lake Real Property or Buffalo Lake Improvements in which Buffalo Lake holds a leasehold interest) and (ii) the Buffalo Lake Personal Property; (b) assign absolutely to the Buffalo Lake Acquiring Entity (i) all Buffalo Lake Leases, security deposits and Rents with respect thereto which may become due or to which Buffalo Lake may now or hereafter become entitled and (ii) all of the Buffalo Lake Service Contracts which Administrative Agent elects in its sole discretion to continue beyond the Closing Date; (c) assign absolutely, grant, convey and transfer to the Buffalo Lake Acquiring Entity all other Collateral owned by Buffalo Lake; and (d) wire transfer to Administrative Agent in immediately available funds all Rents and prepaid rent in respect of any Buffalo Lake Leases, together with all reserves, escrows, deposits, accounts, security deposits or other funds held by Buffalo Lake or any other person on its behalf with respect to the Buffalo Lake Facility.

9

(c)Pioneer Trail Conveyance. Pioneer Trail hereby agrees to (a) grant, convey and transfer to the Pioneer Trail Acquiring Entity (i) fee simple title to the Pioneer Trail Real Property and the Pioneer Trail Improvements (or its leasehold interest, with respect to any portion of the Pioneer Trail Real Property or Pioneer Trail Improvements in which Pioneer Trail holds a leasehold interest) and (ii) the Pioneer Trail Personal Property; (b) assign absolutely to the Pioneer Trail Acquiring Entity (i) all Pioneer Trail Leases, security deposits and Rents with respect thereto which may become due or to which Pioneer Trail may now or hereafter become entitled and (ii) all of the Pioneer Trail Service Contracts which Administrative Agent elects in its sole discretion to continue beyond the Closing Date; (c) assign absolutely, grant, convey and transfer to the Pioneer Trail Acquiring Entity all other Collateral owned by Pioneer Trail; and (d) wire transfer to Administrative Agent in immediately available funds all Rents and prepaid rent in respect of any Pioneer Trail Leases, together with all reserves, escrows, deposits, accounts, security deposits or other funds held by Pioneer Trail or any other person on its behalf with respect to the Pioneer Trail Facility.

(d)Opco Conveyance. Opco hereby agrees to (a) grant, convey and transfer to the Opco Acquiring Entity the Opco Personal Property; (b) assign absolutely to the Opco Acquiring Entity all of the Pioneer Trail Service Contracts or Buffalo Lake Service Contracts to which Opco is a party and which Administrative Agent elects in its sole discretion to continue beyond the Closing Date; and (c) assign absolutely, grant, convey and transfer to the Opco Acquiring Entity all other Collateral owned by Opco.

(e)Retained Assets. Notwithstanding anything to the contrary herein, all Excluded Assets shall remain the property of the applicable owner described on Schedule X with respect to such Excluded Assets, and shall not be conveyed, assigned or transferred to the Acquiring Entities.

(f)Consents to Assignment. Prior to the Closing Date, Borrowers shall deliver to Administrative Agent a schedule of all Buffalo Lake Licenses, Authorizations and Permits, Pioneer Trail Licenses, Authorizations and Permits, Service Contracts and other Personal Property that require that consent be obtained, or notice be provided, in order for such Buffalo Lake Licenses, Authorizations and Permits, Pioneer Trail Licenses, Authorizations and Permits, Service Contracts or other Personal Property to be validly assigned or transferred and to remain in full force in effect (without default or breach of any transfer restriction with respect thereto) following the consummation of the transactions contemplated by this Agreement (collectively, “Transfer Restricted Assets”). Borrowers shall, on a best efforts basis, obtain all consents, authorizations and approvals and deliver all notices (collectively, “Transfer Requirements”) necessary to permit the valid assignment and transfer of all Transfer Restricted Assets and to ensure that such Transfer Restricted Assets remain in full force and effect (without default or breach of any transfer restriction with respect thereto) following the consummation of the transactions contemplated by this Agreement. Without limitation of the terms of Section 3(a) hereof, Administrative Agent may elect, in its sole discretion, to exclude from the transfers and assignments contemplated by this Agreement any Transfer Restricted Assets for which any Transfer Requirements have not been satisfied by the Closing Date (as determined by Administrative Agent).

10

(g)Authorization of Borrowers. Effective as of the Effective Date, Borrowers hereby authorize Agents and Agents’ representatives, agents and designees to (i) disclose the conveyances, assignments and other transactions contemplated by this Agreement to all creditors, vendors, suppliers and customers of Borrowers (collectively, the “Borrower Contacts”) and any Governmental Authorities (as defined in the Credit Agreement), (ii) negotiate the terms of any contracts and agreements with any Borrower Contacts, including, without limitation, the Cargill Agreement, the Corn Oil Assignment and Assumption and the TIF Assumption and Modification Agreement, and amendments to any Facility Documents, in each case, to the extent contemplated hereby or deemed necessary or appropriate by Agents in connection with the transactions contemplated hereby or the operation of the Facilities subsequent to the Closing (provided that no such amendments or modifications to any Facility Documents shall be effective prior to the Closing without the written agreement of Borrowers, not to be unreasonably withheld) and (iii) cause the transfer or replacement any Governmental Approvals (as defined in the Credit Agreement) for the Facilities to Acquiring Entities (provided that no such transfer or replacement shall be effective prior to the Closing Date). Borrowers hereby ratify and affirm the power-of-attorney granted by Borrowers in favor of Collateral Agent pursuant to Section 7.3(c) of the Credit Agreement, and acknowledge and agree that Collateral Agent may take any of the actions described in subclauses (i) through (iii) of the immediately preceding sentence in Collateral Agent’s own name, or in any Borrower’s name pursuant to the exercise of such power-of-attorney.

3.Acceptance of Conveyance by Agent and Lenders.

(a)Subject to the full satisfaction (or waiver by Administrative Agent) on or before the Closing Date of the conditions set forth in Section 9 hereof, Agents and the Lenders agree to accept the conveyances and assignments described in Section 2 hereof, together with the Personal Property pursuant to Section 4 hereof, in full satisfaction of the Obligations (subject in all respects to the terms of Sections 10 and 14 hereof).

(b)Notwithstanding anything to the contrary in this Agreement, Administrative Agent may elect to (i) proceed to Closing as to all of the Collateral or as to only a portion of the Collateral, (ii) not proceed to Closing of any Collateral and (iii) pursue a foreclosure, trustee’s sale or UCC sale with respect to the portion of the Collateral that Administrative Agent, at the direction of the Required Lenders, elects to exclude from Closing under this Agreement (the “Excluded Collateral”). In the event Administrative Agent elects to proceed to Closing as to all or any portion of the Collateral, the covenants, agreements and releases of Agents and the Lenders set forth in Sections 10(a) and 10(b) hereof shall be effective as of such Closing (subject to all other terms and conditions of this Agreement).

11

4.UCC Strict Foreclosure Provisions.

(a)Borrower Acknowledgments. Each Borrower and Borrowers’ Agent acknowledges that, as of the Effective Date (a) Borrowers are indebted to the Lenders under the Financing Documents in the aggregate original principal amount of $170,479,757.00, together with accrued unpaid interest thereon and fees, costs and expenses and other amounts payable under the Financing Documents (the “Current Outstanding Debt Obligations”), which Current Debt Outstanding Obligations are currently due and payable in full without offset, deduction or counterclaim of any kind or character whatsoever, (b) Collateral Agent has been granted a security interest in the Personal Property pursuant to the Financing Documents, (c) the Acknowledged Events of Default have occurred and are continuing under the Financing Documents, and (d) Agents and the Lenders are presently entitled to proceed to foreclose upon the Collateral, including the Personal Property, and to exercise each of Agents’ and the Lenders’ other rights and remedies set forth in the Financing Documents and pursuant to applicable law.

(b)Acceptance of Collateral in Partial Satisfaction of Obligations. Upon Closing (and subject to satisfaction of the conditions set forth in Section 9 hereof), Acquiring Entities, as designees of Collateral Agent, shall accept the Personal Property (less any Personal Property that Administrative Agent designates as Excluded Collateral) in partial satisfaction of the Obligations (and, together with all other Collateral, in full satisfaction of the Obligations to the extent Section 3(a) above applies). Collateral Agent’s acceptance of the Personal Property shall be deemed to satisfy the Obligations to the extent of the fair market value on the Closing Date of the Personal Property so accepted and such amount shall be credited against, and reduce the amount of the Current Outstanding Obligations. Each Borrower and Borrowers’ Agent acknowledges and agrees that (a) the credit being received for the Personal Property accepted by Collateral Agent is fair and reasonable, (b) Collateral Agent may, at the direction of Administrative Agent, without notice to any Borrower or Borrowers’ Agent, assign to one or more persons or entities (which may be an Acquiring Entity) Collateral Agent’s right to take title to all or any portion of the Personal Property in lieu of Collateral Agent taking such title, and (c) any such person or entity so acquiring title to the Personal Property pursuant to the foregoing subclause (b) shall be deemed to have acquired such title as a result of Collateral Agent’s acceptance of the Personal Property pursuant hereto.

(c)Borrower Consent and Waiver. Each Borrower and Borrowers’ Agent hereby irrevocably:

(a)                consents to the acceptance by Acquiring Entities, as designees of Collateral Agent, of the Personal Property in partial satisfaction of the Obligations in accordance with the terms set forth herein and pursuant to the provisions of § 9-620 of the UCC;

(b)                waives and renounces any and all rights to notice it has or may have under Part 6 of Article 9 of the UCC, including, without limitation, all rights under § 9-620 to receive notice of the proposed retention of the Personal Property or subsequent disposition of same, or to the full extent of the law, any other notice or right they may have arising under or pursuant to this or any other section of the UCC or otherwise.

12

(d)Agents’ and the Lenders’ Consent. Pursuant to § 9-620 of the UCC, this Agreement shall constitute the consent of the Agents and the Lenders to the acceptance by Collateral Agent (or its designee) of the Personal Property in partial satisfaction of the Obligations in accordance with the terms set forth herein.

5.Escrow.

(a)Opening; Joint Instructions. Prior to the Closing Date, Administrative Agent shall open the Escrow by delivering a fully executed copy of this Agreement to Escrow Holder. This Agreement shall constitute joint escrow instructions to Escrow Holder in connection with the Escrow. Notwithstanding anything to the contrary contained in this Agreement, (a) none of Administrative Agent, Collateral Agent or the Lenders shall have any duty or obligation to close the transaction described in this Agreement, and (b) Administrative Agent shall have the right, in its sole discretion, to terminate this Agreement, the Escrow, and the transactions contemplated hereby at any time prior to the Closing, without liability, by written notice to Borrowers and Escrow Holder. Such termination shall not be deemed to waive, limit, impair or modify any of the respective rights, remedies or obligations of Agents, the Lenders, Borrowers or any other person or entity under or with respect to the Financing Documents.

(b)Additional Instructions. Borrowers, Agents and the Lenders shall execute and deliver such documents, instruments and escrow instructions reasonably requested by Administrative Agent or Escrow Holder to consummate the Closing on those terms and conditions set out in this Agreement.

6.Borrower Deliveries into Escrow. Borrowers shall, on or prior to the Closing Date, deliver or cause to be delivered to the Escrow Holder each of the following items:

(a)                each of the Deeds, duly executed on behalf of the applicable Borrower party thereto;

(b)                each of the Bills of Sale, duly executed on behalf of the applicable Borrower party thereto;

(c)                each of the Assignments of Leases, duly executed on behalf of the applicable Borrower party thereto;

(d)                each of the Assignments of Contracts, duly executed on behalf of the applicable Borrower party thereto;

(e)                a Certification of Non-Foreign Status and, if required or prescribed pursuant to applicable law, such documentation as shall establish or evidence an exemption from tax withholding under applicable law with respect to the transactions described in this Agreement, duly executed on behalf of each Borrower;

(f)                such authorization documents as the Administrative Agent or the Title Company may require, evidencing the authorization of the execution and performance by each Borrower of this Agreement and the other Deed in Lieu Documents and the performance by Borrowers of the transactions contemplated hereby and thereby, including, without limitation, the organizational documents and authorizing resolutions of each Borrower;

13

(g)                all original letters of credit and all other non-cash security deposits relating to the Leases, together with all leasing files;

(h)                the original Facility Documents (or, with respect to any Facility Document for which an original copy is not in the possession or control of a Borrower, BFE or Parent or not otherwise available to such parties, a true and correct copy of such Facility Document, together with a “lost document” affidavit of the applicable Borrower party thereto); and

(i)                a fully-executed Form 8549 Asset Allocation Agreement, prepared by and in form and substance acceptable to Administrative Agent.

7.Actions at Closing.

(a)Closing shall occur only after Administrative Agent delivers to Escrow Holder, with a copy to Borrowers, written instructions to close (the “Instructions to Close”), which shall, among other things, (a) instruct Escrow Holder to proceed to Closing, subject to the satisfaction (or waiver by Administrative Agent) of all applicable closing conditions set forth in the Instructions to Close or Section 9 hereof, (b) specify the proposed Closing Date and (c) identify any Excluded Collateral, if Administrative Agent elects to exclude any Collateral from the deed-in-lieu or retention of collateral transactions described in this Agreement. If the Instructions to Close shall identify any Excluded Collateral, Escrow Holder shall (and Borrowers hereby authorize Escrow Holder to) modify the Collateral descriptions in the Deed In Lieu Documents as necessary so as to exclude the Excluded Collateral. Upon receipt of the Instructions to Close, Escrow Holder shall proceed to Closing in accordance with the Instructions to Close, without the need for any instructions or consent from Borrowers, and notwithstanding any conflicting instructions from Borrowers. Borrowers hereby agree, on a joint and several basis, to indemnify, defend and hold harmless Escrow Holder from and against any claim, loss, liability, damage or expense (including attorneys’ fees and costs) resulting from or attributable to (i) Escrow Holder’s acting upon unilateral Instructions to Close from Administrative Agent, (ii) Escrow Holder’s failing to act upon any conflicting instructions from Borrowers or (iii) Escrow Holder’s modifications to the Deed In Lieu Documents to exclude the Excluded Collateral, in each case, except to the extent attributable solely and directly to the gross negligence or willful misconduct of Agents or the Lenders.

(b)At the Closing, subject to the satisfaction of the conditions precedent set forth in Section 9 hereof and in accordance with the terms of the Instructions to Close, Escrow Holder shall:

(i)cause the Deeds and the Assignments of Leases to be recorded in the applicable recording offices;

(ii)deliver to Administrative Agent the items listed in Section 6 hereof; and

14

(iii)deliver or cause to be delivered to Administrative Agent the original Title Policies (or an irrevocable commitment for the issuance thereof), in form and substance satisfactory to Administrative Agent and satisfying all applicable requirements set forth in the Instructions to Close.

(c)At the Closing, Borrowers shall deliver to the Acquiring Entities possession of the Facilities, free and clear of any and all current and future rights and interests of any and all persons and entities to occupy, possess, use or buy all or any portion of the Facilities, except under the Leases, together with all keys for the Facilities, clearly labeled.

8.Prorations. Except as otherwise expressly provided herein or in the Payment Schedule (as to amounts to be paid at Closing, in the ordinary course or assumed), all operating costs and accounts payable with respect to the Facilities accrued or payable as of the Closing Date shall be the sole responsibility of and shall be the continuing obligations of Borrowers, including, all taxes and assessments made against or affecting the Facilities, personal property taxes relating to the Personal Property, premiums for insurance relating to the Facilities maintained by Borrowers (which shall remain in effect through the Closing), utilities, rental payments, charges under the Service Contracts and all other costs and expenses. It is the express intention of the parties that, except as expressly provided herein or in the Payment Schedule, Borrowers shall be responsible for all costs, expenses and liabilities of the Facilities accruing prior to the Closing Date, and that Agents, the Lenders, the Acquiring Entities and any other designee thereof shall have no liability or responsibility therefor. Agents, the Lenders, the Acquiring Entities and any such other designee thereof shall not and do not assume or agree to be responsible or liable for any liability, obligation, lien, claim, demand, contract, undertakings or expense of Borrowers, or on or related to the Facilities prior to the Closing Date, except as expressly provided herein or to the extent constituting a payment obligation set forth on the Payment Schedule. Borrowers shall be solely liable for all such liabilities, obligations, liens, claims, demands, contracts, undertaking or expenses arising out of the development, construction, ownership, leasing, management, maintenance or operating of the Facilities prior to the Closing Date.

9.Agent and Lender Conditions. This Agreement and the obligations of Agents and the Lenders hereunder are subject to the satisfaction (or waiver by Administrative Agent) of the following conditions on or before the Closing Date, each as determined by Administrative Agent in its sole discretion:

(a)Escrow Holder shall have received (and shall be in a position to deliver to Administrative Agent pursuant to Section 7 hereof) all of the items listed in Section 6 hereof.

(b)Administrative Agent shall have received each of the following documents:

(i)                   the Cargill Agreement, duly executed on behalf of the Acquiring Entities, Cargill, Incorporated and each affiliate of Cargill, Incorporated party thereto;

15

(ii)                  the TIF Assumption and Modification Agreement, duly executed on behalf of Pioneer Trail, the Pioneer Trail Acquiring Entity, Platte Valley State Bank & Trust Company and BioFuel Energy, LLC;

(iii)                the Corn Oil Assignment and Assumption, duly executed on behalf of Farnam Street Financial, Inc.; and

(iv)                 the BFE Sublease Assignment, duly executed on behalf of BFE, Buffalo Lake, Pioneer Trail and TransMontaigne Product Services Inc.

(c)Administrative Agent shall have received such documents, instruments, agreements, acknowledgments, approvals and other items as Administrative Agent may require, in its sole discretion, to evidence that (i) all Buffalo Lake Licenses, Authorizations and Permits have been properly and validly assigned to the Buffalo Lake Acquiring Entity and remain in full force and effect for the benefit of Acquiring Entities and (ii) all Pioneer Trail Licenses, Authorizations and Permits have been properly and validly assigned to the Pioneer Trail Acquiring Entity and remain in full force and effect for the benefit of Acquiring Entities.

(d)All conditions precedent set forth in the documents evidencing the Acquiring Entity Credit Facility shall have been satisfied or waived, and the Lenders party to such Acquiring Entity Credit Facility shall have deposited the proceeds of a loan advanced thereunder (the “Closing Date Advance”) into Escrow, for disbursement concurrently with the Closing, in an amount sufficient to pay the following amounts and all other amounts described on the Schedule of Closing Payments attached hereto Schedule XI (as the same may be amended or modified prior to Closing upon written agreement of Administrative Agent and Borrowers, the “Payment Schedule”):

(i) the premium for the Title Policies;

(ii)                 all recording costs and expenses with respect to the Deeds and other recordable documents, including any documentary transfer taxes payable in connection with the recordation thereof;

(iii)                 Escrow Holder’s fees in connection with the Escrow; and

(iv)                the costs and expenses of Agents, the Lenders and Borrowers in connection with this Agreement and the transactions contemplated hereby, including, without limitation, attorneys’ fees.

(e)Administrative Agent shall have received, reviewed and approved, in Administrative Agent’s sole discretion, each of the following items:

(i)the results of a physical inspection of the Real Properties (for which purpose the Borrowers shall provide to Agents and their agents and designees access to the Real Properties and shall execute any documents reasonably requested by Administrative Agent in connection with such access);

16

(ii)if requested by Administrative Agent, the results of one or more hazardous materials studies with respect to the Real Properties;

(iii)all contracts and other documents relevant to the Facilities, including all Facility Documents;

(iv)copies of all Leases and correspondence with any Tenant relating to the use or occupancy of the Facilities;

(v)such consents, approvals and estoppels as Administrative Agent may require from any governmental authority in connection with the transactions contemplated hereby; and

(vi)all other matters in connection with the Facilities that Administrative Agent elects to inspect or investigate.

(f)Administrative Agent shall have received an opinion letter of counsel to Borrowers, addressed to Agents and the Lenders, in form and substance acceptable to Administrative Agent.

(g)Administrative Agent shall have received a copy of any fairness opinion delivered to Borrowers or any BFE Parties (as hereafter defined) in connection with the transactions contemplated hereby.

(h)All of the representations and warranties contained in Section 11 of this Agreement shall be accurate and complete as of the Closing Date.

(i)There has been no material adverse change, as determined by Administrative Agent in its sole discretion, in the condition or status of the Loans, any Borrower, the Facilities or any other Collateral.

10.Covenant Not to Sue; Release.

(a)                By Agents and the Lenders in Favor of Borrowers.

(i)                Upon Closing, but without limiting the provisions of Section 26 hereof regarding the non-merger of the Financing Documents with the Deeds, the Bills of Sale and the other Deed in Lieu Documents, or the provisions of Sections 10(a)(ii) or 14 hereof, (A) the Obligations under the Financing Documents will not be personally enforceable against Borrowers, (B) Agents and the Lenders covenant not to sue or bring any action against Borrowers for the Obligations under the Financing Documents and (C) Agents and the Lenders shall not be entitled to seek a deficiency judgment against any Borrower for the Obligations under the Financing Documents.

Notwithstanding the foregoing, the Financing Documents shall continue to constitute, as against Borrowers, bona fide nonrecourse obligations secured solely by the Mortgages and all other liens, security interests, pledges and assignments granted in favor of Collateral Agent under the Financing Documents. Furthermore, Agents shall have the right to name Borrowers in any action to the extent necessary in Administrative Agent’s judgment in connection with the foreclosure of either or both of the Mortgages or the exercise of any other remedies under the Financing Documents, provided no recourse or claim has been asserted against Borrowers in any such action, subject to the terms of this subsection (a). The agreements by Agents and the Lenders under this subsection (a) shall relate solely to the Facilities and the Obligations under the Financing Documents.

17

(ii)                 Notwithstanding the provisions of subsection (a)(i) above, and without in any way limiting the provisions hereof, if any of the following occur, the agreements of Agents and the Lenders set forth in subsection (a)(i) above shall be of no force or effect and shall be void ab initio, Borrowers’ liability under the Financing Documents and all rights and remedies of the Agent and the Lenders thereunder shall be revived and reinstated automatically without need of any further action by any party and Agents and the Lenders shall be entitled to immediately exercise all rights and remedies with respect to Borrowers and the Collateral provided for under the Financing Documents, at law or in equity:

(A)                The conveyance of the Facilities and other Collateral from Borrowers to the Acquiring Entities is voided, avoided or set aside for any reason whatsoever by a court of competent jurisdiction or the release granted pursuant to Section 10(c) hereof is voided, set aside or rendered unenforceable by a court of competent jurisdiction; or

(B)                Borrowers, any person claiming by or through Borrowers or any of their respective agents, employees, representatives, officers, directors, shareholders, subsidiaries, affiliates, heirs, personal representatives, successors or assigns voluntarily commences, initiates, joins in, assists, cooperates in, acts in concert with or participates as an adverse party (not including participation through oral testimony or production of documents compelled by legal process requiring such testimony or production of documents), directly or indirectly, in any suit or other proceeding against any Agent or Lender or any their respective predecessors in interest, successors, assigns or affiliates relating to the Loans or the other Obligations, the Financing Documents or the Facilities, that seeks to avoid, set aside, rescind or render unenforceable (1) the conveyance of the Facilities and other Collateral from Borrowers to the Acquiring Entities or (2) the release granted in pursuant to Section 10(c) hereof.

(iii)                Notwithstanding the provisions of subsection (a)(i) above, and without in any way limiting the provisions hereof, in the event that (A) any Borrower shall breach any of the covenants or agreements of Borrowers hereunder or under any of the other Deed in Lieu Documents or (B) Administrative Agent shall determine that any representation or warranty of a Borrower hereunder or under any of the other Deed in Lieu Documents was untrue in any material respect when made (an event of the type described in the foregoing subclauses (A) or (B), a “Misrepresentation or Covenant Breach”), the agreements of Agents and the Lenders set forth in subsection (a)(i) above shall be of no force or effect and shall be void ab initio, Borrowers’ liability under the Financing Documents and all rights and remedies of the Agent and the Lenders thereunder shall be revived and reinstated automatically without need of any further action by any party and Agents and the Lenders shall be entitled to immediately exercise all rights and remedies with respect to Borrowers and the Collateral provided for under the Financing Documents, at law or in equity, in each case, relating solely to the subject matter of the Misrepresentation or Covenant Breach (including any Collateral related thereto) and to the extent of any loss, damage, liability or claim suffered by any Agent, Lender or Acquiring Entity as a result thereof.

18

Each Borrower acknowledges that the agreements of Agents and the Lenders under this subsection (a) constitute fair and adequate consideration for the transactions contemplated by this Agreement and the other Deed in Lieu Documents.

(b)                By Agents and the Lenders in Favor of the BFE Parties. Upon Closing, Agents and the Lenders fully, finally and forever release, acquit and discharge Parent, BFE and their respective directors, officers, shareholders, employees, agents and representatives (collectively, the “BFE Parties”), from any and all actions, causes of action, claims, debts, demands, liabilities, obligations and suits, of whatever kind or nature (excluding any actions, causes of action, claims, debts, demands, liabilities, obligations or suits attributable in whole or in part to any fraud or intentional misrepresentation on the part of any BFE Party), known or unknown, in law or equity, that Agents or the Lenders have against any BFE Party as of the Closing Date (collectively, the “Released Claims”), in each case to the extent such Released Claims relate to the Loans or the other Obligations, the Financing Documents, the Facilities, this Agreement or the other Deed in Lieu Documents or the transactions contemplated hereby or thereby.

(c)                By Borrowers, Parent and BFE. Borrower, Borrowers’ Agent, BFE and Parent each fully, finally and forever releases, acquits and discharges (i) each Agent and Lender, (ii) the predecessors in interest of each Agent and Lender, (iii) the successors, assigns and affiliates of each Agent and Lender and (iv) the directors, officers, employees, agents and representatives of each Agent and Lender (collectively, the “Lender Parties”), from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, contracts, agreements, accounts, defenses, suits and offsets against the Indebtedness of whatever kind, character or nature whatsoever, in law or equity, contract or in tort, that Borrower, Borrowers’ Agent, BFE or Parent has or in the future may have, whether known or unknown, suspected or unsuspected, including, without implied limitation, such claims and defenses as fraud, mistake, duress and usury, for or by reason of any matter, cause or thing whatsoever, arising in respect of the Loans or the other Obligations, the Financing Documents, the Facilities, the transactions contemplated hereby or by the other Deed in Lieu Documents or the actions or omissions of any of the Lender Parties in respect of the foregoing. Furthermore, none of Borrowers, Borrowers’ Agent, BFE or Parent shall commence, join in, prosecute or participate in any suit or other proceeding in a position which is adverse to any of the Lender Parties arising directly or indirectly from any of the foregoing matters. The releases contained in this paragraph shall survive Closing. BORROWER, BORROWERS’ AGENT, BFE AND PARENT EACH EXPRESSLY WAIVES ANY PROVISION OF STATUTORY OR DECISIONAL LAW TO THE EFFECT THAT A RELEASE OF CLAIMS DOES NOT EXTEND TO CLAIMS WHICH THE RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN SUCH PARTY’S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY SUCH PARTY, MUST HAVE MATERIALLY AFFECTED SUCH PARTY’S SETTLEMENT WITH THE RELEASED PARTIES.

19

11.Representations and Warranties. Each Borrower and Borrowers’ Agent hereby makes the following representations and warranties to Agents and the Lenders, which representations and warranties shall be deemed reaffirmed at the time of Closing and shall survive the execution of this Agreement and the Closing:

(a)                Each Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Buffalo Lake is in good standing and is qualified to conduct business under the laws of the State of Minnesota and all other states for which any registration is required for it to conduct its business. Pioneer Trail is in good standing and is qualified to conduct business under the laws of the State of Nebraska and all other states for which any registration is required for it to conduct its business.

(b)               The execution, delivery, and performance of this Agreement and the other Deed in Lieu Documents (i) have been duly authorized on the part of each Borrower and do not require the consent or approval of any governmental agency or body or any other person or entity (other than Agents and the Lenders), including the consent or approval of any party to any contract or agreement to be assigned to the Acquiring Entities pursuant to this Agreement or any of the other Deed in Lieu Documents, and (ii) are not in contravention of or in conflict with any law or regulation or any term or provision of any charter or governing documents of any Borrower. Each of the Deed in Lieu Documents constitutes the legal, valid and binding obligation of each Borrower party thereto and is enforceable against such Borrower in accordance with its terms.

(c)                Except as set forth in Schedule IV attached hereto, no Borrower has (i) been served with process in connection with any litigation regarding the Facilities, (ii) received notice of any administrative or other proceeding pending against or affecting the Facilities, (iii) has knowledge of any covenants, agreements, liens, leases, encumbrances, claims, easements, restrictions or other matters, other than liens for taxes which are not yet due and payable, affecting the Facilities or any portion thereof, except the matters disclosed by the Title Policies (or the latest commitment therefor), (iv) been served with process or notice in connection with any condemnation, environmental, zoning or other land use regulation litigation or proceeding with respect to the Facilities or any portion thereof and, to the best of each Borrower’s knowledge, no such litigation or proceeding is pending or threatened, (v) received any written notice from any governmental authority of a violation on, or with respect to, the Facilities, of any applicable building codes, environmental, zoning, subdivision, land use, or sales laws or other local, state and federal laws or regulations, and to the best of each Borrower’s knowledge, the Facilities conform to all applicable zoning ordinances and regulations and other laws, orders, ordinances, permits, rules, regulations and requirements, or (vi) entered into any instruments for the purpose of creating assessment districts affecting the Real Properties other than as set forth in the Title Policies (or the latest commitment therefor).

20

(d)                No Borrower has filed any petition seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law relating to bankruptcy or insolvency, nor has any such petition been filed against any Borrower. No general assignment of the property of any Borrower has been made for the benefit of creditors, and no receiver, master, liquidator or trustee has been appointed for any Borrower. None of the Collateral is subject to any liens or security interests in favor of any party, other than the liens and security interests granted in favor of Collateral Agent pursuant to the Financing Documents. Buffalo Lake holds fee simple title to the Buffalo Lake Real Property and Buffalo Lake Improvements (except for any portion thereof leased by Buffalo Lake from another party, in which case Buffalo Lake holds a valid and assignable leasehold interest with respect thereto), and good and marketable title to all Buffalo Lake Personal Property. Pioneer Trail holds fee simple title to the Pioneer Trail Real Property and Pioneer Trail Improvements (except for any portion thereof leased by Pioneer Trail from another party, in which case Pioneer Trail holds a valid and assignable leasehold interest with respect thereto), and good and marketable title to all Pioneer Trail Personal Property.

(e)Attached hereto as Schedule V is a true and complete schedule of all of the Facility Documents. The Facility Documents to be delivered to Administrative Agent pursuant to this Agreement are accurate and complete copies of all of the books, records, computer software, data, contracts, agreements, plans, studies and other documentation in the possession of, under the control of or reasonably available to Borrowers with respect to the Facilities.

(f)Except as set forth in Schedule VI attached hereto, there are no broker’s commissions or finder’s fees payable in connection with (i) the Facilities, (ii) any Leases, whether executed or under negotiation, (iii) the transactions contemplated by this Agreement or (iv) the Closing.

(g)                None of the execution of this Agreement, the transfer of Borrowers’ rights, title and interests in the Facilities and the other Collateral and the performance of the other transactions contemplated by this Agreement is being effected by Borrowers with any intent to hinder, delay or defraud any person or entity to whom any Borrower is now indebted or may hereafter become indebted.

(h)                As a result of the receipt by Borrowers of the consideration to be given by the Agents and the Lenders pursuant to this Agreement, Borrowers will receive a reasonably equivalent value in exchange for the transfers of their respective rights, title and interests in the Facilities and other Collateral under this Agreement.

21

(i)                 The Deeds and the other Deed in Lieu Documents are absolute conveyances to the Acquiring Entities of all of the rights, title and interests of Borrowers in and to the Facilities and the other Collateral and are not intended as and do not constitute security for the payment or repayment of any indebtedness or the performance of any obligation of any Borrower or any other person or entity of any kind or nature whatsoever, and there is no express or implied agreement or understanding between any Borrower or any of its affiliates, on the one hand, and any Agent or Lender, on the other hand, to purchase the Facilities or any other Collateral from the Acquiring Entities following the Closing.

(j)                 Each Borrower (i) is experienced and sophisticated in transactions of the type contemplated under this Agreement, and has been significantly and directly involved in the structuring of such transactions, (ii) understands fully the terms of this Agreement and the other Deed in Lieu Documents and the consequences thereof, (iii) has been afforded an opportunity to have this Agreement and the other Deed in Lieu Documents reviewed by, and to discuss all such documents with, such attorneys and other persons as it may wish, (iv) has entered into this Agreement and will execute and deliver the other Deed in Lieu Documents of its own free will and accord and without threat or duress and (v) has been represented by competent legal counsel of its own choosing throughout the negotiation, preparation, and execution of this Agreement, and in connection with the Closing. Each Borrower has obtained independent advice with respect to the tax consequences of the transactions contemplated by this Agreement and has analyzed and accepted those tax consequences.

(k)                Except as described on Schedule VII attached hereto, there are no Leases in existence with respect to the Facilities or any portion thereof. Borrowers have delivered to Administrative Agent true, correct and complete originals of all Leases. Borrowers further represent and warrant that (i) all Leases are in full force and effect, (ii) to the best of each Borrower’s knowledge, there are no defaults by any Tenant or the Borrower under any Lease, nor has any event occurred that, with the giving of notice or passage of time, or both, would constitute such a default, (iii) except as described on Schedule VII attached hereto, there are (except as contained in the Leases by their express terms) no options or rights to renew, extend, expand or terminate any Lease, (iv) there are no options to purchase any portion of the Facilities, (v) there are no Tenants, persons, or entities occupying space in any of the Facilities other than pursuant to the Leases, (vi) no Tenant has made any payment of Rent in advance, and no security deposit has been paid under any Lease, (vii) no allowance or rent concession of any nature is owed to any Tenant, nor is any landlord improvement work required which has not previously been completed and paid in full, (viii) no Tenant has any right or has threatened any claim or demand against the Borrower, or offset or set off against Rent and (ix) there are no leasing commissions or other commissions presently due and unpaid with respect to any Leases or which could become due and payable in the future upon the exercise of any right or option contained in any Lease, or with respect to any contract, license, or agreement relating thereto.

22

(l)                 Attached hereto as Schedule VIII is a true, complete and accurate schedule of all Service Contracts in existence with respect to the Facilities or any part thereof. Borrowers have delivered to Administrative Agent true, correct and complete copies of all Service Contracts, all such Service Contracts are in full force and effect and, except as set forth in Schedule VIII attached hereto, there are no defaults under any of the Service Contracts, nor has any event occurred that, with the giving of notice or passage of time, or both, would constitute a default thereunder. Borrowers have obtained the written acknowledgment and consent of each party to any Service Contract (other than a Borrower) whose consent is required under the applicable Service Contract as a condition to Borrowers’ right to assign such Service Contract to Acquiring Entities in connection with the Closing.

(m)               As of the Closing Date, there are no employees employed at the Facilities, except those employed by the Acquiring Entities or their agents or designees. If, notwithstanding the representations and warranties of Borrowers set forth in the immediately preceding sentence, there exists any employees of Borrowers or any affiliates thereof (i) none of Agents, the Lenders or the Acquiring Entities shall have any obligation whatsoever to such employees and (ii) except for accrued payroll obligations reflected on the Payment Schedule for which payment is to be made at Closing, Borrowers shall be solely responsible for all compensation and benefits of such employees, and the payment of all taxes imposed by state, local, or federal law as employer with respect to such employees.

12.Excluded Service Contracts. Notwithstanding anything to the contrary contained herein or in any of the other Deed in Lieu Documents, neither Collateral Agent nor either Acquiring Entity shall be deemed to have accepted the assignment of any Service Contracts other than those Service Contracts described on Schedule IX attached hereto (the “Accepted Service Contracts”). Borrowers shall be solely responsible for the termination or disposition of any Service Contracts not set forth on Schedule IX attached hereto (the “Excluded Service Contracts”), and shall not look to any Agent, Lender, Acquiring Entity or any designee thereof for reimbursement of, or liability for, any costs, fees, charges and expenses under such Excluded Service Contracts. In connection with the foregoing, each Borrower acknowledges, agrees and hereby confirms that it has obtained such assurances as it deems necessary from the appropriate parties to firmly bind itself and to fully and completely carry out the covenant set forth in the immediately preceding sentence, which covenant shall survive the Closing.

13.Acquiring Entity and Parent Post-Closing Obligations.

(a)Agents and the Lenders shall cause Acquiring Entities to agree to cause the respective contractors of Acquiring Entities to extend at will offers of employment following the Closing Date, on such terms and conditions as Acquiring Entities shall determine in their sole and absolute discretion, to not less than 10 of the existing employees of each of the Facilities, in each case, for an employment period of not less than 90 days following the Closing Date.

(b)Agents and the Lenders shall cause Acquiring Entities to agree to issue in favor of BFE Holdings, LLC, immediately following the Closing, membership interests evidencing a 1% equity ownership in Opco Acquiring Entity. Notwithstanding the preceding sentence, in the event Borrowers are ready, willing and able to sell the Facilities to a ready, willing and able purchaser prior to the occurrence of a Release Event (as defined in that certain Agreement dated of even date herewith among Agents, the Lenders, Borrowers and First National Bank of Omaha, as escrow agent (the “Release Agreement”)), and such sale cannot be consummated as a result of the failure of the Lenders to approve such sale and release their liens, the Lenders shall cause Opco Acquiring Entity to agree to issue in favor of BFE Holdings, LLC, immediately following the Closing, (i) a 5-year, 17.5% equity Warrant in Opco Acquiring Entity, with a strike price equal to outstanding principal balance of the Loans, all accrued unpaid interest thereon (including interest calculated at the default rate) and all other Obligations payable under the Financing Documents as of the Closing Date, and (ii) membership interests evidencing a 2% equity ownership interest in Opco Acquiring Entity.

23

(c)Agents shall use commercially reasonable efforts to cause Opco Acquiring Entity to be initially governed by the terms and conditions of the form Operating Agreement attached hereto as Schedule XII. The failure of BFE Holdings, LLC to sign and agree to the Acquiring Entity’s Operating Agreement ultimately agreed to by Agents and the Lenders shall result in BFE Holdings, LLC forfeiting its entitlement to the equity ownership and equity Warrants that it would otherwise be entitled to receive pursuant to Section 13(b).

(d)Agents and the Lenders shall cause Acquiring Entities to agree, within 180 days following the Closing Date, to (i) deliver to Kinder Morgan Interstate Gas Transmission LLC a “fresh start” consolidated audited balance sheet for Acquiring Entities, prepared by independent certified public accountants acceptable to Administrative Agent, and (ii) use good faith efforts to encourage Kinder Morgan to release to BFE the Kinder Morgan Deposit.

(e)Provided that BFE shall be in compliance with the terms of the Transition Employment Obligation (as hereafter defined), Agents and the Lenders shall cause Acquiring Entities to pay to BFE the sum of $260,000 per month for a period of three months following the Closing Date, commencing on the first Business Day of the month immediately following the month in which the Closing Date occurs and continuing thereafter on the first Business Day of the two months immediately following such first payment date.

(f)BFE hereby covenants and agrees to and for the benefit of Agents, Lenders and Acquiring Entities, to offer continued employment to each of the employees identified on Schedule XIII attached hereto (the “Designated Employees”) for a period of 90 days, and to use its commercially reasonable efforts to cause such Designated Employees to be available to Acquiring Entities, Agents and the Independent Sales Agent (as defined in the Release Agreement), and all agents and employees of the foregoing, for purposes of providing such consultation and support services as Acquiring Entities, Agents or the Independent Sales Agent may from time to time request. All Designated Employees shall be the employees of BFE, and none of Acquiring Entities, Agents, Lenders or the Independent Sales Agent shall have any obligation for the payment of any salaries or benefits of such Designated Employees (subject to the obligation of Acquiring Entities to make payments to BFE as provided in subclause (d) above). The obligations of Parent under this subclause (e) are collectively referred to herein as the “Transition Employment Obligation”.

24

The obligations under this Section 13 shall survive the Closing.

14.Indemnity. Each Borrower hereby agrees, on a joint and several basis, to forever indemnify and hold harmless the Lender Parties from and against any and all claims, demands, obligations, liabilities, suits, judgments, causes of action, damages, costs, losses and expenses of every type, kind, nature, description or character, including attorneys’ fees and costs, arising from, relating to or in connection with (a) any breach or default by any Borrower of its obligations under this Agreement or any of the other Deed in Lieu Documents, (b) any inaccuracy in any of the certifications, representations or warranties of any Borrower set forth in this Agreement or any of the other Deed in Lieu Documents, irrespective of any claim that it should have been discovered prior to the Effective Date or Closing Date, (c) any act, event, omission, occurrence, liability, obligation, lien, claim, demand, contract, undertaking, cost or expense arising out of any Lease, any of the Accepted Service Contracts or otherwise out of the development, construction, ownership, management or operation of the Facilities prior to the Closing Date, and (d) any fraud or intentional misrepresentation by any Borrower or any of its affiliates in connection with this Agreement, any of the other Deed in Lieu Documents or the transactions contemplated hereby or thereby. Notwithstanding anything to the contrary contained in this Agreement, all covenants, representations, warranties and obligations of Borrowers under the Financing Documents in respect of Environmental Laws, Environmental Claims and Hazardous Materials (as such terms are defined in the Credit Agreement), including, without limitation, the representations, warranties and covenants of Borrowers under Sections 4.13 and 5.26 of the Credit Agreement and all indemnifications, liabilities and other obligations of Borrowers in respect of such matters, together with all rights and remedies of Agents and the Lenders under the Financing Documents, at law or in equity to enforce such indemnifications, liabilities and other obligations (subject in all respects to the terms of Section 10(a) hereof), shall survive the Closing.

Parent, BFE and each Borrower hereby agree, on a joint and several basis, to pay, immediately upon demand from any Acquiring Entity, Agent or Lender, any and all costs or expenses incurred by any Acquiring Entity, Agent or Lender in connection with, arising out of or in any way relating to the Asset Retirement Obligations, and shall forever indemnify and hold harmless such parties from and against any and all claims, demands, obligations, liabilities, suits, judgments, causes of action, damages, costs, losses and expenses of every type, kind, nature, description or character, including attorneys’ fees and costs, arising from, relating to or in connection with the Asset Retirement Obligations. The foregoing obligations of Parent, BFE and Borrowers in respect of the Asset Retirement Obligations shall survive the Closing.

15.Remedies Cumulative. All remedies provided in this Agreement are cumulative and non-exclusive and shall be in addition to any and all other rights and remedies provided under the Financing Documents, at law or in equity. No waiver of any default or event of default (including, without limitation, any of the Acknowledged Events of Default) shall be implied from any omission by any party to take action on account of such default or event of default, even if such default or event of default persists or is repeated. No waiver of any default or event of default shall affect any default or event of default other than the default or event of default expressly waived, and any such waiver shall be operative only for the time and to the extent stated. No waiver of any provision of any of the Deed in Lieu Documents shall be construed as a waiver of any subsequent breach of the same provision. The consent of any Agent or Lender to or approval of any act by Borrowers requiring further consent or approval shall not be deemed to waive or render unnecessary the consent to or approval of any subsequent act by any Agent or Lender.

25

16.Unconditional and Absolute Transfer.

(a)As a material inducement and consideration to Agents and the Lenders to enter into this Agreement, each Borrower confirms and agrees that the grants, assignments, conveyances and transfers of the Facilities and the other Collateral under this Agreement and the other Deed in Lieu Documents (other than Collateral expressly excluded from such assignment, transfer or other conveyance pursuant to the terms hereof) are (i) unconditional and absolute transfers to the Acquiring Entities of all of each Borrower’s rights, title and interests therein, including all equity and rights of redemption and rights of reinstatement, and (ii) not intended as a deed of trust, mortgage, trust conveyance or other security agreement or device of any nature whatsoever. In confirmation of the foregoing, and as a material inducement and consideration to Agents and the Lenders to enter into this Agreement, each Borrower hereby unconditionally, irrevocably and absolutely assigns to Collateral Agent, and to the Acquiring Entities as designees of Collateral Agent, all of such Borrower’s equity, right of redemption and right of reinstatement in and to the Facilities and the other Collateral (other than Collateral expressly excluded hereunder from the assignments and transfers contemplated hereby). Following the Closing, no Borrower shall have (and no Borrower has reserved) any right, title or interest of any kind whatsoever in or to the Facilities or any other Collateral (other than Collateral expressly excluded hereunder from the assignments and transfers contemplated hereby).

(b)Except as expressly provided herein, no Agent, Lender or any of their respective successors, assigns or designees shall be deemed to assume, directly or indirectly, any liability, obligation, duty or responsibility whatsoever for the payment, discharge or other resolution of any liability, obligation, indebtedness, lien, security interest, encumbrance, claim or other condition or matter that has been or may hereafter be created or assumed by Borrowers, anyone associated with the Borrowers or any of predecessors in interest of Borrowers or that may otherwise presently exist with respect to the Facilities or any other Collateral. The Acquiring Entities and any successor, assignee or designee may, at any time after the Closing, sell, transfer, encumber, lease, assign or abandon, all or any portion of the Facilities or any interest therein and take or omit to take any action which such party in its sole discretion may deem to be in its best interest.

(c)As a material inducement and consideration to Agents and the Lenders to enter into this Agreement, each Borrower hereby knowingly, unconditionally and irrevocably waives and relinquishes to the maximum extent permitted by law all rights and benefits under (i) any and all equity and right of redemption, or right of reinstatement under applicable law, and (ii) any anti-deficiency and other laws generally affecting the rights and remedies of creditors.

26

17.Waiver of Borrower Contests. Each Borrower agrees that it will not at any time after the Closing Date initiate or undertake any legal proceeding to rescind or set aside this Agreement or the transactions contemplated hereby for any reason whatsoever, including any claim that the transactions contemplated hereby constitute a preference, a fraudulent conveyance or security device.

18.Bankruptcy Abstention. Each Borrower acknowledges that this Agreement represents Borrowers’ final efforts to reorganize and restructure their financial obligations with respect to the Facilities and therefore such Borrower agrees that it will not, for a period of 91 days following the Closing Date, seek voluntary relief, cooperate in or encourage any other party to seek involuntary relief, under the provisions of Chapter 11 or any other Chapter of the United States Bankruptcy Code. Each Borrower further agrees that, should a voluntary or involuntary bankruptcy proceeding be filed by or against it, it will not, for a period of 91 days following the Closing Date, contest a motion to dismiss, to abstain or to lift the automatic stay, based upon this Agreement and the settlement contemplated hereunder. Each Borrower further acknowledge that the exercise of any bankruptcy court’s discretion to determine to dismiss or suspend the proceeding pursuant to 11 U.S.C. §305(a)(1) is not reviewable by appeal or otherwise pursuant to the provisions of 11 U.S.C. §305(c) or §105. Each Borrower agrees, on a joint and several basis, to forever indemnify and hold harmless the Acquiring Entities, Agents, the Lenders and each other Lender Party from and against any and all claims, demands, obligations, liabilities, suits, judgments, causes of action, damages, costs, losses or expenses of every type, kind, nature, description or character, including attorneys’ fees and costs, arising from, relating to or in connection with any breach by a Borrower of the covenants and agreements set forth in this Section 18.

19.Agents and the Lenders Not Responsible for Tax Consequences. Each Borrower agrees and acknowledges that: (a) it has been advised by Agents and the Lenders to seek the advice of its own tax attorney or certified public accountant for determination of any income tax consequences that may arise from the execution and delivery of this Agreement, or the consummation of the transactions contemplated hereby; and (b) no Acquiring Entity, Agent or Lender shall be responsible or liable for any income tax consequences to Borrowers or to any of their respective affiliates, members, partners, shareholders, principals or any other person or entity, that may arise from the execution and delivery of this Agreement and the other Deed in Lieu Documents, or the consummation of the transactions contemplated hereby or thereby. Each Borrower unconditionally releases and forever discharges each Lender Party from and against any and all claims, demands, obligations, liabilities, suits, judgments, causes of action, damages, costs, losses or expenses of every type, kind, nature, description or character, including attorneys’ fees and costs, arising from, relating to or in connection with any income tax consequences to Borrowers, or their respective affiliates, members, partners, shareholders, principals or any other person or entity, resulting from the execution and delivery of this Agreement, or the consummation of the transactions contemplated hereby, whether such income tax consequences are intended or unintended, anticipated or unanticipated, foreseen or unforeseen, and desired or undesired. As used in this Section 19, the term “income tax consequences” shall refer to any taxes imposed in accordance with the Internal Revenue Code of 1986, as amended, and the taxing power and authority of any state or other jurisdiction, foreign or domestic, against any of the foregoing parties, and shall include specifically any taxes imposed upon income arising from, relating to or in connection with the satisfaction of Borrowers’ or any other person’s or entity’s obligations under Financing Documents, the transfer of the Facilities and other Collateral and any distributions required in connection therewith. Under no circumstances shall any Lender Party be responsible or liable for any consequential, punitive, special or any other damages, whether or not foreseeable, that may be suffered by Borrowers or their respective affiliates, members, partners, shareholders, principals or any other person or entity as a direct or indirect result of such income tax consequences.

27

20.Ratification of Financing Documents. The Financing Documents are and will continue to be the legal, valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their terms, except as expressly modified hereby.

21.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute one and the same instrument. An electronically delivered counterpart shall be equivalent for all purposes to a counterpart bearing an original signature. Any party delivering an executed counterpart of this Agreement by electronic transmission shall deliver a counterpart bearing an original signature to the other parties within a reasonable period of time following the electronic delivery, provided that failure to deliver the counterpart bearing the original signature shall not affect the enforceability of this Agreement.

22.Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS 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).

23.WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

24.Entire Agreement; Headings. This Agreement and the other Deed in Lieu Documents (including all Exhibits and Schedules hereto and thereto) contain the entire agreement among Borrowers, Agents and the Lenders with respect to the subject matter hereof, and any prior representations, negotiations or agreements between or among the parties hereto are merged into this Agreement. The section heading used in this Agreement are intended solely for convenience of reference and shall not in any manner amplify, limit, modify or otherwise be used in the interpretation of any of the provisions of this Agreement or the other Deed in Lieu Documents.

25.Invalidity. If any of the provisions of this Agreement, or the application thereof to any person, party or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such provision or provisions to persons, parties or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and every provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

28

26.No Merger or Impairment. Following the recordation of the Deeds and the execution and delivery of the other Deed in Lieu Documents (a) the title to the Real Properties conveyed by the Deeds and the other property conveyed by the other Deed in Lieu Documents shall not merge with or into the liens and security interests of the Mortgages and the other Financing Documents Documents, (b) none of the Financing Documents or any lien or security interest granted thereunder shall be extinguished, impaired or affected in any manner whatsoever, (c) the Collateral shall remain subject to the liens and security interests of the Mortgages and the other Financing Documents, it being the intent of the parties that Collateral Agent’s interest in the Collateral shall not merge with or into the interest of the Acquiring Entities (or their respective successors, assignees or designees) in the Real Properties or the other property conveyed by the Deed in Lieu Documents, and that such interests are and shall remain separate, distinct, and independent, and (d) Agents, the Lenders and their respective successors, assigns and designees shall continue to enjoy all rights and remedies under the Mortgages and the other Financing Documents, including the right to exercise the power of sale and/or right of foreclosure contained therein. Nothing contained in this Agreement or the consummation of the transactions contemplated hereby shall (a) affect or impair or be construed to affect or impair the lien, charge or encumbrance of the Mortgages or any of the other Financing Documents against the Collateral or (ii) except as expressly provided hereby, release or affect the liability of any person or entity now or hereafter liable under the Mortgages or any of the other Financing Documents.

27.Amendments; Survival. This Agreement may not be amended except by an amendment in writing signed by all parties hereto. This Agreement and the covenants, representations, warranties, indemnities, releases, waivers, and other rights and obligations contained herein shall survive the Closing.

28.Further Assurances. At any time or from time to time upon the request of Administrative Agent, Borrowers shall execute all such additional documents, instruments and estoppel certificates and shall do all such additional acts and things reasonably requested by Administrative Agent in order to fully confer upon the Acquiring Entities, Agents and the Lenders the intended benefits of this Agreement.

29

29.Notices. Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered, (b) if mailed by United States Certified Mail (postage prepaid, return receipt requested), three (3) Business Days after mailing, (c) if by Federal Express or other reliable overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier on the day of transmission, if prior to 5:00 pm (recipient’s time) on a Business Day (otherwise, on the first Business Day following transmission), so long as copy is sent by overnight courier for delivery not later than the one (1) Business Day after the Business Day on which notice was given by telecopier, as set forth below.

If to the Borrowers:

c/o BFE Operating Company, LLC
1600 Broadway, Suite 2200
Denver, Colorado 80202
Attention: Scott Pearce
Telephone: (303) 640-6500
Facsimile: (303) 592-8117

With a copies to:

Arnold & Porter LLP

555 12^th Street
Washington, D.C. 20004
Attention: Michael L. Bernstein
Telephone: (202) 942-5577
Facsimile: (202) 942-5999

Arnold & Porter LLP

370 Seventeenth Street

Suite 4400
Denver, Colorado 80202
Attention: Timothy Macdonald
Telephone: (303) 863-2334
Facsimile: (303) 832-0438

If to Agents or the Lenders:

c/o First National Bank of Omaha, as Administrative Agent
1620 Dodge Street, Stop 1050
Omaha, Nebraska 68197
Attention: Brad Brummund
Telephone: (402) 602-3507
Facsimile: (402) 602-3056

With a copy to:

Kutak Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
Attention: Jeff Wegner
Telephone: (402) 346-6000
Facsimile: (402) 346-1148

or at such other address as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.

30

30.General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)the words and phrases defined in this Agreement have the meanings specified in this Agreement, and if not specified in this Agreement, have the meaning specified in the Financing Agreement, and apply to the singular and plural forms;

(b)any references herein to “Sections”, “subsections”, “paragraphs”, “clauses” and other subdivisions without reference to a documents are to designated Sections, subsections, paragraphs, clauses and other subdivisions of this Agreement;

(c)a reference to a subsection without further reference to a Section is a reference to the subsection in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions;

(d)the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision; and

(e)the terms “include”, “includes” and “including” mean without limitation by reason of enumeration.

31.Time of Essence. Time is of the essence of this Agreement and the other Deed in Lieu Documents.

32.Legal Fees. In the event of any controversy or dispute arising out of this Agreement, the Deed in Lieu Documents or the transactions contemplated hereby and thereby, the prevailing party or parties shall be entitled to have and recover from the other party all attorneys’ fees and costs, witness fees, court costs, and other litigation expenses incurred by the prevailing party, as determined by the court (including, without limitation, all attorneys’ fees and costs, court costs and other expenses incurred by such party in connection with any appeal, any insolvency, bankruptcy, reorganization, arrangement or other similar proceeding, and in connection with the enforcement of any judgment).

33.Joint and Several Obligations. Each of the obligations of Borrowers under this Agreement shall be the joint and several obligations of all Borrowers.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

31

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

ADMINISTRATIVE AGENT AND COLLATERAL AGENT:
FIRST NATIONAL BANK OF OMAHA, a national banking association, as Administrative Agent and Collateral Agent
By:	/s/ Andrew Wong
Name:	Andrew Wong
Title:	Vice President
BORROWERS AND BORROWERS’ AGENT:
BFE OPERATING COMPANY, a Delaware limited liability company, as Borrower and as Borrowers’ Agent
By:	/s/ Scott H. Pearce
Name:	Scott H. Pearce
Title:	Authorized Person
BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company, as Borrower
By:	/s/Scott H. Pearce
Name:	Scott H. Pearce
Title:	Authorized Person
PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company, as Borrower
By:	/s/ Scott H. Pearce
Name:	Scott H. Pearce
Title:	Authorized Person

[EXECUTION PAGE OF DEED IN LIEU OF FORECLOSURE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS]

LENDERS:

FIRST NATIONAL BANK OF OMAHA, as Lender

By:  

Name:  

Title:  

STANDARD CHARTERED BANK, as Lender

By:  

Name:  

Title:  

AGFIRST FARM CREDIT BANK,  as Lender

By:  

Name:  

Title:  

FARM CREDIT BANK OF TEXAS, as Lender

By:  

Name:  

Title:  

FCS FINANCIAL, FLCA, as Lender

By:  

Name:  

Title:  

TPG CREDIT STRATEGIES FUND, L.P., as Lender

By:  

Name:  

Title:  

[EXECUTION PAGE OF DEED IN LIEU OF FORECLOSURE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS]

TPG CREDIT STRATEGIES FUND II, L.P., as Lender

By:

Name:

Title:

AMARILLO NATIONAL BANK, as Lender

By:

Name:

Title:

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

By:

Name:

Title:

[EXECUTION PAGE OF DEED IN LIEU OF FORECLOSURE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS]

ACCEPTED AND AGREED AS TO SECTION 10(c) and 13:

BIOFUEL ENERGY CORP., a Delaware corporation

By:

Name:

Title:

BIOFUEL ENERGY, LLC, a Delaware limited liability company

By:

Name:

Title:

EXHIBIT A

BUFFALO LAKE LEGAL DESCRIPTION

Tract A:

Parcel 1:

A tract of land in the Northeast Quarter and the Southeast Quarter of Section 1, Township 102 North, Range 31 West, Martin County, Minnesota described as follows:

Beginning at the East Quarter Corner of Section 1, Township 102 North, Range 31 West, Martin County, Minnesota; thence North 00 degrees 36 minutes 44 seconds East, (County Coordinate System) along the East line of the Northeast Quarter of Section 1, a distance of 134.67 feet; thence South 89 degrees 56 minutes 44 seconds West, a distance of 950.58 feet; thence North 00 degrees 36 minutes 44 seconds East, a distance of 688.36 feet; thence South 88 degrees 53 minutes 16 seconds East, a distance of 950.55 feet to the East line of the Northeast Quarter of Section 1; thence North 00 degrees 36 minutes 44 seconds East, along said East line, a distance of 1827.63 feet to the Northeast Corner of Section 1; thence North 89 degrees 21 minutes 24 seconds West, along the North line of the Northeast Quarter of Section 1, a distance of 1315.08 feet to the Northwest Corner of the Northeast Quarter of the Northeast Quarter of Section 1; thence South 00 degrees 45 minutes 22 seconds West, along the West line of the Northeast Quarter of the Northeast Quarter of Section 1, a distance of 1295.19 feet to the Southwest Corner of the Northeast Quarter of the Northeast Quarter; thence North 88 degrees 28 minutes 02 seconds West, along the South line of the Northwest Quarter of the Northeast Quarter of Section 1, a distance of 1318.45 feet to the North-South Quarter line of Section 1; thence South 00 degrees 54 minutes 09 seconds West, along the North-South Quarter line of Section 1; a distance of 2139.68 feet to the north line of a tract of land deeded to Cargill, Incorporated and recorded and described in the Office of the County Recorder in Document No. 321994 (Parcel 1); thence South 89 degrees 03 minutes 49 seconds East, along the north line of said Cargill, Incorporated tract and the north line of a tract of land deeded to Cargill, Incorporated and recorded and described in the Office of the County Recorder in Document No. 347139, a distance of 1262.00 feet to the east line of said Cargill, Incorporated tract described in Document No. 347139; thence South 00 degrees 56 minutes 11 seconds West, along said east line, a distance of 375.74 feet to the north line of said Cargill, Incorporated tract described in Document No. 312994 (Parcel 1); thence South 83 degrees 44 minutes 53 seconds East, along said north line, a distance of 469.51 feet to the west line of Borden.s Addition according to the recorded plat on file and of record in the Office of the County Recorder; thence North 00 degrees 56 minutes 11 seconds East, along said west line, a distance of 419.23 feet to the north line of said Borden.s Addition; thence South 89 degrees 03 minutes 49 seconds East, along said north line, a distance of 513.49 feet to the southwest corner of a tract of land deeded to J. I. Case Company and recorded and described in the Office of the County Recorder in Document No. 263926; thence North 00 degrees 56 minutes 11 seconds East, along the west line of said J. I. Case Company tract, a distance of 779.12 feet to the northwest corner of said J. I. Case Company tract; thence South 89 degrees 03 minutes 49 seconds East, along the north line of said J. I. Case Company tract, a distance of 400.00 feet to the East line of the Southeast Quarter of Section 1; thence North 00 degrees 56 minutes 11 seconds East, along the East line of the Southeast Quarter of Section 1, a distance of 17.48 feet to the point of beginning.

Parcel 2:

Non-exclusive easement for ingress and egress as contained in Amended and Restated Access Easement Agreement by and between Kayton & Rabe, L.L.P., a Minnesota limited liability partnership, as Grantor, and Buffalo Lake Energy, LLC, a Delaware limited liability company, as Grantee, dated May 2, 2007, recorded May 4, 2007, as Document No. 2007R-389170.

Tract B:

The Northwest Quarter (NW1/4) of the Northeast Quarter (NE1/4) of Section One (1), Township One Hundred and Two (102) North, Range Thirty-one (31) West of the Fifth Principal Meridian, Martin County, Minnesota, EXCEPTING THEREFROM: A tract of land in the Northwest Quarter of the Northeast Quarter of Section 1, Township 102 North, Range 31 West of the Fifth Principal Meridian in Martin County, Minnesota, more particularly described as follows:

Beginning at the North Quarter corner of said Section 1; thence South 00 degrees 14 minutes 37 seconds West along the North-South Quarter line a distance of 376.99 feet; thence North 90 degrees 00 minutes 00 seconds East parallel with the North line of said Section 1 a distance of 321.95 feet; thence North 02 degrees 00 minutes 00 seconds West a distance of 377.22 feet to the North line of said Section 1; thence South 90 degrees 00 minutes 00 seconds West along said North line a distance of 307.18 feet to the point of beginning.

2

Tract C:

A tract of land in the Northeast Quarter of the Southwest Quarter of Section 1, Township 102 North, Range 31 West, Martin County, Minnesota described as follows:

Commencing at the North Quarter Corner of Section 1, Township 102 North, Range 31 West, Martin County, Minnesota; thence South 00 degrees 10 minutes 59 seconds West, (assumed bearing) along the East line of the Northwest Quarter and the East line of the Southwest Quarter of Section 1, a distance of 2811.56 feet to the point of beginning; thence continuing South 00 degrees 10 minutes 59 seconds West, along the East line of the Southwest Quarter of Section 1, a distance of 402.85 feet to the North line of a tract of land deeded to the City of Fairmont and recorded and described in the Office of the Martin County Recorder in Document No. 357223; thence North 89 degrees 49 minutes 01 seconds West, along said North line, a distance of 200.00 feet to the West line of said City Tract; thence South 00 degrees 10 minutes 59 seconds West, along said West line a distance of 266.00 feet to the South line of said City Tract; thence South 89 degrees 49 minutes 01 seconds East, along said South line, a distance of 200.00 feet to the East line of the Southwest Quarter of Section 1; thence South 00 degrees 10 minutes 59 seconds West, along the East line of Section 1 a distance of 276.20 feet to the North line of a tract of land deeded to Cargill, Incorporated and recorded and described in the Office of the Martin County Recorder in Document No. 321994 (Parcel 2); thence North 84 degrees 28 minutes 04 seconds West, along said North line, a distance of 1075.94 feet; thence North 51 degrees 55 minutes 31 seconds East, a distance of 1364.25 feet to the point of beginning.

Tract D:

The West 100.00 feet of the North 100.00 feet of Lot 1, Block One of Borden’s Addition in the City of Fairmont, Martin County, Minnesota, according to the plat thereof on file and of record in the office of the County Recorder. Together with a 20.00 foot wide Access Easement set forth in Warranty Deed filed November 7, 2005 as Document No. 2005R-381039, over and across a strip of land in Lot 1 in Block One of Borden’s Addition in the City of Fairmont, Martin County, Minnesota, bounded as follows: On the West by the West line of said Borden’s Addition, on the East by a line lying parallel with and distant 20.00 feet East (measured at right angles) of the West line of said Borden’s Addition, on the North by the South line of the North 100.00 feet of Lot 1, Block One of said Borden’s Addition, on the South by the North line of a Public Road Easement as recorded and described in the office of the County Recorder in Document No. 269586.

3

Tract E:

Parcel 1:

A tract of land in the Southeast Quarter of Section 1, Township 102 North, Range 31, West of the Fifth Principal Meridian in Martin County, Minnesota, described as follows: Beginning at the Southwest corner of Block 1 of Borden.s Addition to the City of Fairmont, Minnesota, according to the recorded plat thereof on file and of record in the Office of the Register of Deeds, Martin County, Minnesota; thence North 84 degrees 40 minutes 24 seconds West along the northerly right-of-way line of the Chicago and Northwestern Railway Company a distance of 1,738.85 feet to the west line of the Southeast Quarter of Section 1 at a point 130.33 feet North of the Southwest corner of the Northwest Quarter of the Southeast Quarter of Section 1; thence North 00 degrees 06 minutes 36 seconds West along the West line of the Southeast Quarter of Section 1 a distance of 358.37 feet to a point on the Westerly projection of the North line of Block 1 of Borden.s Addition; thence North 90 degrees 00 minutes 00 seconds East along the Westerly projection of the North line of Block 1 of Borden.s Addition a distance of 633.00 feet; thence South 00 degrees 00 minutes 00 seconds West a distance of 316.92 feet; thence South 84 degrees 40 minutes 24 seconds East parallel with the Northerly Railroad right-of-way line a distance of 1,103.85 feet to the West line of Block 1 of Borden.s Addition; thence South 00 degrees 00 minutes 00 seconds West along the West line of Block 1 of Borden.s Addition a distance of 100.43 feet to the point of beginning, according to the United States Government Survey thereof.

Parcel 2:

A tract of land consisting of one acre, more or less, located in the Southwest Quarter of Section 1, Township 102 North, Range 31, West of the Fifth Principal Meridian, more particularly described as follows, to wit: Commencing at a point on the East line of said Southwest Quarter of said Section 1, aforesaid, and 16.57 feet North of the North right-of-way line of the Chicago Northwestern Railway Company as the point of commencement of the tract to be conveyed herein: Running thence northwesterly parallel with said Chicago Northwestern Railway Company right-of-way for a distance of 2656 feet, more or less, to the West line of said Southwest Quarter of said Section 1, aforesaid, and being 16.57 feet North of the North right-of-way line of said Chicago Northwestern Railway Company; running thence South 16.57 feet, along the West line of said Southwest Quarter of Section 1, aforesaid, to the North right-of-way line of said Chicago Northwestern Railway Company; running thence Southeasterly along the North right-of-way line of said Chicago Northwestern Railway Company to the East line of said Southwest Quarter of said Section 1, aforesaid; running thence North along the East line of said Southwest Quarter of said Section 1, aforesaid, to the place of commencement of the tract of land described herein, containing one acre of land, more or less, according to the United States Government Survey thereof.

4

Parcel 3:

A tract of land lying in portions of Lots 1, 2 and 4 in Block 1 of Borden.s Addition to the City of Fairmont, Minnesota, described as follows: Beginning at the Southeast corner of Block 1 of Borden.s Addition; thence Westerly along the Southerly line of Block 1 of Borden.s Addition a distance of 867.20 feet to the Southwest corner of Block 1; thence North along the West line of Block 1 a distance of 100.43 feet; thence Easterly parallel with the Southerly line of Block 1 a distance of 867.20 feet to the East line of Block 1; thence South along the East line of Block 1 a distance of 100.43 feet to the point of beginning, according to the recorded plat thereof on file or of record in the Office of the Register of Deeds in and for Martin County, Minnesota.

Parcel 4:

A tract of land in the Southeast Quarter of Section 1, Township 102 North, Range 31 West in Martin County, Minnesota, described as follows: Commencing at the northwest corner of Block 1 of Borden.s Addition to the City of Fairmont, Minnesota according to the plat thereof on file and of record in the office of the Martin County Recorder; thence South 90 degrees 00 minutes 00 seconds West (assumed bearing) along the westerly extension of the north line of Borden.s Addition a distance of 467.49 feet to the point of beginning; thence continuing South 90 degrees 00 minutes 00 seconds West along the westerly extension of the north line of Borden.s Addition a distance of 629.04 feet to the east line of a tract of land deeded to Truman Farmers Elevator Co. and recorded and described in the office of the Martin County Recorder in Book 308 of Deeds, page 86; thence South 0 degrees 00 minutes 00 seconds West along the east line of said Truman Farmers Elevator Co. tract a distance of 316.92 feet; thence South 84 degrees 40 minutes 24 seconds East along the north line of said Truman Farmers Elevator Co. tract a distance of 631.77 feet; thence North 0 degrees 00 minutes 00 seconds East a distance of 375.57 feet to the point of beginning.

Tract F:

A tract of land in Block One of Borden’s Addition in the City of Fairmont, Martin County, Minnesota, according to the recorded plat thereof on file and of record in the office of the County Recorder described as follows:

5

Commencing at the Northwest corner of Borden’s Addition in the City of Fairmont, Martin County, Minnesota, according to the recorded plat thereof on file and of record in the office of the County Recorder; thence South 00 degrees 56 minutes 11 seconds West, (county coordinate system), along the west line of said Borden’s Addition, a distance of 100.00 feet to the south line of a tract of land deeded to Buffalo Lake Energy, LLC and recorded and described in the office of the County Recorder in Document No. 2005R-381039 and the point of beginning; thence South 89 degrees 03 minutes 49 seconds East, along said south line, a distance of 0.75 feet; thence Southeasterly, a distance of 452.01 feet along a nontangential curve to the left having a radius of 739.49 feet a central angle of 35 degrees 01 minutes 19 seconds and a 445.01 foot chord which bears South 38 degrees 09 minutes 06 seconds East, to the north line of a tract of land deeded

to Cargill Incorporated and recorded and described in the office of the County Recorder in Document No. 321994 (Parcel 3); thence North 83 degrees 44 minutes 53 seconds West, along the north line of said Cargill Incorporated tract, a distance of 282.55 feet to the west line of said Borden’s Addition; thence North 00 degrees 56 minutes 11 seconds East, along said west line, a distance of 319.23 feet to the point of beginning.

Tract G:

A tract of land in Block One of Borden’s Addition in the City of Fairmont, Martin County, Minnesota, according to the recorded plat thereof on file and of record in the office of the County Recorder described as follows:

Commencing at the Northwest corner of said Borden’s Addition; thence South 89 degrees 03 minutes 49 seconds East, (county coordinate system), along the north line of said Borden’s Addition, a distance of 100.00 feet to the northeast corner or a tract of land deeded to Buffalo Lake Energy, LLC and recorded and described in the office of the County Recorder in Document No. 2005R-381039 and the point of beginning; thence continuing South 89 degrees 03 minutes 49 seconds East, along the north line of said Borden’s Addition, a distance of 32.00 feet; thence South 00 degrees 56 minutes 11 seconds west, parallel with the west line of said Borden’s Addition, a distance of 315.12 feet to a point on the northeasterly line of a tract of land deeded to Buffalo Lake Energy, LLC and recorded and described in the office of the County Recorder in Document No. 2007R-389165 said point being on a non-tangential having a radius of 739.49 feet and a center radius which bears North 49 degrees 44 minutes 20 seconds East; thence northwesterly, along said curve, a distance of 253.23 feet through a central angle of 19 degrees 37 minutes 14 seconds to the south line of said Buffalo Lake Energy, LLC tract recorded in

Document No. 2005R-381039; thence South 89 degrees 03 minutes 49 seconds East, along said south line, a distance of 99.25 feet to the southeast corner of said tract; thence North 00 degrees 56 minutes 11 seconds East, along the east line of said tract, a distance of 100.00 feet to the point of beginning.

6

Tract H:

A tract of land in the Southeast Quarter of the Northeast Quarter (SE 1/4 NE1/4), Section One (1), Township One Hundred Two (102) North, Range Thirty One (31) West, Martin County, Minnesota, said tract being described as follows:

Commencing at the East Quarter (E 1/4) corner of said Section One (1); thence North 00 degrees 00 minutes 00 seconds East along the East line of said Northeast Quarter (NE 1/4) and the center line of County State Aid Highway 39 a distance of 234.67 feet to the point of beginning of the tract to be described; thence North 89 degrees 30 minutes 00 seconds West a distance of 408.88 feet; thence South 01 degrees 51 minutes 15 seconds West a distance of 108.42 feet; thence South 89 degrees 20 minutes 00 seconds West a distance of 538.18 feet; thence North 00 degrees 00 minutes 00 seconds East a distance of 688.36 feet; thence South 89 degrees 30 minutes 00 seconds East a distance of 650.85 feet; thence South 00 degrees 45 minutes 45 seconds West a distance of 513.99 feet; thence South 89 degrees 30 minutes 00 seconds East a distance of 306.54 feet to said East line and centerline; thence South 00 degrees 00 minutes 00 seconds West along said East line and centerline a distance of 55.00 feet to the point of beginning.

Tract I:

Parcel 1:

A tract of land in the Northwest Quarter of the Northwest Quarter of Section 5, Township 102 North, Range 31 West, in Martin County, Minnesota, described as follows:

Commencing at the Northwest corner of said Section 5; thence South 01 degrees 24 minutes 49 seconds West, (County Coordinate System) along the west line of the Northwest Quarter of said Section 5, a distance of 363.00 feet; thence South 88 degrees 48 minutes 36 seconds East, a distance of 33.00 feet to the east right-of-way line of 140th Avenue and the point of beginning; thence continuing South 88 degrees 48 minutes 36 seconds East, a distance of 75.00 feet; thence South 01 degrees 24 minutes 49 seconds West, a distance of 100.00 feet; thence North 88 degrees 48 minutes 36 seconds West, a distance of 75.00 feet to said east right-of-way line; thence North 01 degrees 24 minutes 49 seconds East, along said east right-of-way line, a distance of 100.00 feet to the point of beginning.

7

Parcel 2:

Non-exclusive easements over part of the North Half of Section 5, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 15, 2007, recorded October 24, 2007 as Document No. 2007R-391585 and as amended by Amendment to Pipeline Easement dated September 12, 2007, recorded September 24, 2007 as Document No. 2007R-391153.

Parcel 3:

Non-exclusive easements over part of the Northwest Quarter of Section 4, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 1, 2007, recorded October 9, 2007 as Document No. 2007R-391364.

Parcel 4:

Non-exclusive easements over part of the Northeast Quarter of the Northwest Quarter of Section 4, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 8, 2007, recorded October 9, 2007 as Document No. 2007R-391352.

Parcel 5:

Non-exclusive easements over part of the Northwest Quarter of the Northeast Quarter of Section 4, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 15, 2007, recorded October 9, 2007 as Document No. 2007R-391354.

Parcel 6:

Non-exclusive easements over part of the Northwest Quarter of the Northeast Quarter of Section 4, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 1, 2007, recorded October 9, 2007 as Document No. 2007R-391360.

Parcel 7:

Non-exclusive easements over part of the East Half of the fractional Northeast Quarter of Section 4, Township 102 North, Range 31 West, and over the West 83.05 acres, more or less, of the West Half of Section 3, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 1, 2007, recorded October 9, 2007 as Document No. 2007R-391361.

8

Parcel 8:

Non-exclusive easements over part of the West Half of Section 3, Township 102 North, Range 31 West, Except the West 83.05 acres, more or less, thereof, and over the Northeast Quarter of Section 3, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in

Pipeline Easement dated August 2, 2007, recorded October 9, 2007 as Document No. 2007R-391359.

Parcel 9:

Non-exclusive easements over part of the Northwest Quarter of Section 2, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 1, 2007, recorded October 9, 2007 as Document No. 2007R-391362 AND as contained in Pipeline Easement dated June 17, 2008, recorded August 28, 2008, as Document No. 2008R-395912.

Parcel 10:

Non-exclusive easements over the East 608.3 feet of the Northwest Quarter and over part of the Northeast Quarter of Section 2, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 2, 2007, recorded October 9, 2007 as Document No. 2007R-391358.

Parcel 11:

Non-exclusive easements over part of the Northeast Quarter of Section 2, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 1, 2007, recorded October 9, 2007 as Document No. 2007R-391357.

Parcel 12:

Non-exclusive easements over part of the Northeast Quarter of Section 2, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 15, 2007, recorded October 9, 2007 as Document No. 2007R-391353.

9

Parcel 13:

Non-exclusive easements over part of the Northeast Quarter of Section 2, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 2, 2007, recorded October 9, 2007 as Document No. 2007R-391356.

Parcel 14:

Non-exclusive easements over part of the Northwest Quarter of Section 1, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 14, 2007, recorded October 9, 2007 as Document No. 2007R-391355.

Parcel 15:

Non-exclusive easements over part of the Northwest Quarter of Section 1, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 1, 2007, recorded October 9, 2007 as Document No. 2007R-391365.

Parcel 16:

Non-exclusive easements over part of the Northwest Quarter of the Northeast Quarter of Section 1, Township 102 North, Range 31 West, in Martin County, Minnesota, as contained in Pipeline Easement dated August 1, 2007, recorded October 9, 2007 as Document No. 2007R-391363.

(abstract property)

10

EXHIBIT B

PIONEER TRAIL LEGAL DESCRIPTION

Parcel 1 (Fee Interest):

Real property in the City of Grand Island, County of Hall, State of Nebraska, described as follows:

Lot 2, Cargill Addition to the City of Wood River, Hall County, Nebraska.

Parcel 2 - Included in, and forming a part of Parcel 1

Parcel 3 (Leasehold Interest):

Real property in the City of Wood River, County of Hall, State of Nebraska, described as follows: A triangular tract of land in the southeast corner of the Southeast Quarter of Section 24, in Township 10 North, Range 12West of the 6th P.M., Hall County, Nebraska, being all of the Southeast Quarter lying South of the Union Pacific Railroad Company right of way. Said tract more particularly described as follows:

Referring to the southeast corner of said Section 24, this being the point of beginning; thence West on the section line a distance of 1684.5 feet to a point on the southerly right of way line of the railroad; thence in a Northeasterly direction on this right of way line a distance of 1806.4 feet to a point on the east section line of said Section 24; thence South on said section line a distance of 651.4 feet to the point of beginning. LESS AND EXCEPT That part of the South One-Half of the Southeast Quarter of Section 24, in Township 10 North, Range 12West of the 6th P.M., Hall County, Nebraska, more particularly described as follows:

Commencing at a point on the East line of the Southeast Quarter, said point being 526.13 feet North of the Southeast corner of said Section 24; thence 133.0 feet West perpendicular to the East line of the Southeast Quarter of said Section 24 to a point; thence 75.0 feet North parallel to the East line of the Southeast Quarter of said Section 24 to a point on the southerly right of way line of the Union Pacific Railroad Company; thence 142.62 feet Northeasterly along the Southerly right of way line of said railroad, to a point on the East line of the Southeast Quarter of said Section 24; thence 126.49 feet South along the East line of the Southeast Quarter of said Section 24, to the point of beginning. LESS AND EXCEPT that part conveyed to the County of Hall, State of Nebraska by Warranty Deed recorded in Book 79, Page 573 in the office of the Register of Deeds in Hall County, Nebraska; Subject to the Union Pacific Railroad right of way and subject to the county roads.

EXHIBIT C

FORM OF ASSIGNMENT OF CONTRACTS

ASSIGNMENT OF CONTRACTS

This ASSIGNMENT OF SERVICE CONTRACTS (this “Assignment”) is made and entered into as of __________ __, 2013, by and between [__________], a Delaware limited liability company (“Assignor”) and ____________, a Delaware limited liability company (“Assignee”).

RECITALS

A.     Reference is hereby made to that certain Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions dated as of April 11, 2013 (the “Agreement”) among Assignor, [BFE Operating Company, LLC, Buffalo Lake Energy, LLC, Pioneer Trail Energy, LLC], First National Bank of Omaha, as Administrative Agent and Collateral Agent, and the Lenders party thereto. The terms of the Agreement are incorporated herein by reference. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Agreement.

B.     Assignor is the owner of [the Buffalo Lake Facility][the Pioneer Trail Facility][100% of the outstanding ownership interests in the Borrowers]. Pursuant to the Agreement, Assignor has agreed to transfer and convey to Assignee all of Assignor’s right, title, estate and interest in and to the Contracts (as hereafter defined).

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.      Assignor hereby assigns, conveys, and transfers to Assignee all of Assignor’s right, title, and interest in and to all equipment or railcar leases, management and service contracts and similar agreements for equipment or services relating to or required for the use, occupancy, or operation of [the Buffalo Lake Facility][the Pioneer Trail Facility][either of the Facilities] (collectively, the “Contracts”).

2.      Assignee hereby accepts such assignment of Assignor’s right, title, estate and interest in, to and under solely those Contracts that are set forth in Schedule I attached hereto.

3.      Assignor hereby agrees to indemnify, defend, and hold Assignee harmless from and against any and all liability, loss, cost, damage and expense (including, without limitation, reasonable attorneys’ fees and costs) directly or indirectly arising out of or based upon Assignor’s failure to keep, perform, fulfill, and observe any of the terms, covenants, obligations, agreements, and conditions required to be kept, performed, fulfilled and observed by the contractor under the Contracts prior to the execution and delivery of this Assignment by Assignor and Assignee.

4.      Assignor hereby represents and warrants to Assignee that no previous conveyance of Assignor’s interest in the Contracts has been made, except under the Financing Documents.

5.      This Assignment is an absolute and outright transfer, conveyance, and sale of title to the Contracts, in effect as well as in form, and is not intended to create a mortgage, trust conveyance, security agreement or security interest of any kind.

6.      Assignor covenants and agrees with Assignee hereafter to deliver to Assignee such further documents of conveyance as Assignee or its counsel may reasonably require with respect to the Contracts.

7.      This Assignment shall be binding upon and inure to the benefit of the successors and assigns of Assignor and Assignee.

8.      This Assignment shall be governed by and construed and interpreted in accordance with the laws of the State of New York.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

EXECUTION PAGE FOLLOWS]

2

IN WITNESS WHEREOF, the parties hereto have executed this Assignment of Contracts as of the date first above written.

ASSIGNOR:
[BFE OPERATING COMPANY, a Delaware limited liability company
By:
Name:
Title:
BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:
PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:	]

STATE OF COLORADO    )

                                                ) ss.

COUNTY OF                       ) 

The foregoing instrument was acknowledged before me this               day of                   , 2013, by                           , a member of                               .

WITNESS my hand and official seal.

	Notary Public
My Commission Expires:

[SIGNATURE PAGE TO ASSIGNMENT OF CONTRACTS]

ASSIGNEE:

[_____________], a Delaware limited liability company

By:

Name:

Title:

STATE OF NEBRASKA    )

                                                ) ss.

COUNTY OF                       ) 

The foregoing instrument was acknowledged before me this              day of                   , 2013, by                           , a member of                               , a limited liability company.

WITNESS my hand and official seal.

	Notary Public
My Commission Expires:

[SIGNATURE PAGE TO ASSIGNMENT OF CONTRACTS]

SCHEDULE I – ASSUMED CONTRACTS

[to be provided by Administrative Agent on or before Closing]

EXHIBIT D

FORM OF ASSIGNMENT OF LEASES

RECORDING REQUESTED BY,

AND WHEN RECORDED RETURN

TO:

Joel L. Wiegert

Kutak Rock LLP

The Omaha Building

1650 Farnam Street

Omaha, NE 68102

(Space Above Line For Recorder’s Use Only)

ASSIGNMENT OF LEASES

This ASSIGNMENT OF LEASES (this “Assignment”) is made as of this __ day of ________ 2013, by and between [__________________], a Delaware limited liability company (“Assignor”)and [_____________], a Delaware limited liability company (“Assignee”).

RECITALS:

A. Assignor is presently the owner and holder of all of the lessor’s interest in the leases and tenancies described in Schedule 1 attached hereto and incorporated herein by this reference (collectively, the “Leases”), which Leases affect that certain real property located in the State of [Nebraska][Minnesota] and more particularly described in Schedule 2 attached hereto and incorporated herein by this reference the (“Property”); and

B. Pursuant to that certain Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions dated as of April 11, 2013 (the “Agreement”) among Assignor, [BFE Operating Company, LLC, Buffalo Lake Energy, LLC, Pioneer Trail Energy, LLC], First National Bank of Omaha, as Administrative Agent and Collateral Agent, and the Lenders party thereto, Assignor has agreed to transfer and convey to Assignee all of Assignor’s right, title, estate and interest in and to the Property and all of Assignor’s right, title, estate and interest as lessor in, to and under the Leases.

NOW, THEREFORE, in order to carry out the terms of the Agreement, and in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows:

1. Assignment. Assignor hereby grants, transfers, conveys and assigns to Assignee all of Assignor’s right, title, estate and interest in, to and under the Leases, together with (i) any and all right, title, estate and interest of Assignor as lessor or landlord under the Leases, whether now owned or hereafter acquired, in and to the real property which is the subject thereof and any improvements and fixtures located thereon, (ii) any rights, privileges, easements, rights of way or appurtenances appertaining thereto (including, without limitation, any and all rents, issues, profits, royalties, license revenues, concession revenues, income and other benefits derived from such real property hereafter accruing, and any and all claims, causes of action, rights to proceeds or awards related to such real property hereafter accruing), (iii) all right, title, estate and interest of Assignor in and to security deposits and prepaid rents, if any, as have been paid to Assignor pursuant to such Leases and have not, prior to the date hereof, been applied or repaid by Assignor and (iv) all right, title, estate and interest of Assignor in and to subleases or any other occupancy agreements, if any, relating to such real property.

2.Assumption. Assignee hereby accepts such assignment of Assignor’s right, title, estate and interest in, to and under the Leases.

3.Indemnification of Assignee. Assignor hereby agrees to indemnify, defend, and hold Assignee harmless from and against any and all liability, loss, cost, damage and expense (including, without limitation, reasonable attorneys’ fees and costs) directly or indirectly arising out of or based upon Assignor’s failure to keep, perform, fulfill, and observe any of the terms covenants, obligations, agreements, and conditions required to be kept, performed, fulfilled, and observed by the lessor under the Leases prior to the execution and delivery of this Assignment by Assignor and Assignee.

4.Further Assurances. Assignor hereby covenants that it will, at any time and from time to time following a written request therefor, execute and deliver to Assignee and its successors and assigns, any additional or confirmatory instruments and take such further acts (including, without limitation, sending notices of this Assignment to the tenants under the Leases) as Assignee may reasonably request to evidence fully the assignment contained herein.

5.Appointment. Assignor hereby irrevocably appoints Assignee and its successors and assigns, as the true and lawful attorney and agent of Assignor, in Assignor’s name and stead, to enforce the provisions of the Leases.

6.Binding Effect. This Assignment shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

2

7.Governing Law. This Assignment shall be construed in accordance with and governed by the laws of the State of New York.

8.Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument.

9.Assignment Absolute. This Assignment constitutes an absolute and outright transfer, conveyance and assignment of the Leases, in effect as well as in form, and is not intended to create a mortgage, trust conveyance, security agreement or security interest of any kind.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

EXECUTION PAGES FOLLOW]

3

IN WITNESS WHEREOF, the parties hereto have executed this Assignment of Leases as of the date first above written.

ASSIGNOR:
[BFE OPERATING COMPANY, a Delaware limited liability company
By:
Name:
Title:
BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:
PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:	]

STATE OF COLORADO    )

                                                ) ss.

COUNTY OF                       ) 

The foregoing instrument was acknowledged before me this               day of                   , 2013, by                           , a member of                               .

WITNESS my hand and official seal.

	Notary Public
My Commission Expires:

[SIGNATURE PAGE TO ASSIGNMENT OF LEASES]

ASSIGNEE:

[_____________], a Delaware limited liability company

By:

Name:

Title:

STATE OF NEBRASKA    )

                                                ) ss.

COUNTY OF                       ) 

The foregoing instrument was acknowledged before me this               day of                   , 2013, by                           , a member of                               , a limited liability company.

WITNESS my hand and official seal.

	Notary Public
My Commission Expires:

[SIGNATURE PAGE TO ASSIGNMENT OF LEASES]

SCHEDULE 1 – LEASES

[to be provided by Administrative Agent on or before Closing]

SCHEDULE 2 – LEGAL DESCRIPTION

[to be provided by Administrative Agent on or before Closing]

EXHIBIT E

FORM OF BILL OF SALE

Bill of Sale

This Bill of Sale (this “Bill of Sale”) is made and executed as of __________ __, 2013, by [____________], a Delaware limited liability company (the “Transferor”), in favor of [____________], a Delaware limited liability company (the “Transferee”).

RECITALS

A. Reference is hereby made to that certain Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions dated as of April 11, 2013 (the “Agreement”) among Assignor, [BFE Operating Company, LLC, Buffalo Lake Energy, LLC, Pioneer Trail Energy, LLC], First National Bank of Omaha, as Administrative Agent and Collateral Agent, and the Lenders party thereto. The terms of the Agreement are incorporated herein by reference. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Agreement.

B. Concurrently with the execution of this Bill of Sale, the Transferor is executing a the [Buffalo Lake][Pioneer Trail][Opco] Deed of even date herewith, under which the Transferor is conveying to the Transferee certain real property and improvements (collectively, the “Real Property”) located in State of [Nebraks][Minnesota] and more particularly described in Schedule 1 attached to this Bill of Sale.

C. The Transferor desires, as a part of the conveyance of the Real Property, to convey to the Transferee all of the [Buffalo Lake][Pioneer Trail][Opco] Personal Property.

For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Transferor agrees as follows:

1.The Transferor hereby sells, assigns, transfers, conveys and delivers to the Transferee all right, title and interest of the Transferor in and to the [Buffalo Lake][Pioneer Trail][Opco] Personal Property.

2.The Transferor hereby represents and warrants to the Transferee that, other than those liens and security interests granted under the Financing Documents which still encumber and affect the [Buffalo Lake][Pioneer Trail][Opco] Personal Property, no previous conveyance of any Transferor’s interest in the [Buffalo Lake][Pioneer Trail][Opco] Personal Property has been made and the [Buffalo Lake][Pioneer Trail][Opco] Personal Property is being transferred hereby to the Transferee free and clear of all liens, claims and encumbrances of any kind.

3.This Bill of Sale is an absolute and outright transfer, conveyance, and sale of title to the [Buffalo Lake][Pioneer Trail][Opco] Personal Property, in effect as well as in form, and is not intended to create a mortgage, trust conveyance, security agreement or security interest of any kind.

4.The Transferor covenants and agrees with the Transferee hereafter to deliver to the Transferee, to the extent they do not impose or entail any greater obligations upon or for any Transferor than those set forth in this Bill of Sale, such further documents of conveyance as Transferee or its counsel may reasonably require with respect to the [Buffalo Lake][Pioneer Trail][Opco] Personal Property.

5.Concurrently with the delivery of this Bill of Sale to the Transferee, the Transferor shall deliver to the Transferee possession and control of all of the [Buffalo Lake][Pioneer Trail][Opco] Personal Property.

6.This Bill of Sale shall be binding upon and inure to the benefit of the successors and assigns of the Transferors and the Transferee.

7.This Bill of Sale shall be governed by and construed and interpreted in accordance with the laws of the Stare of New York.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

EXECUTION PAGE FOLLOWS]

2

IN WITNESS WHEREOF, The Transferor has executed this Bill of Sale as of the date first above written.

ASSIGNOR:
[BFE OPERATING COMPANY, a Delaware limited liability company
By:
Name:
Title:
BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:
PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:	]

STATE OF COLORADO    )

                                                ) ss.

COUNTY OF                       ) 

The foregoing instrument was acknowledged before me this               day of                   , 2013, by                           , a member of                               .

WITNESS my hand and official seal.

	Notary Public
My Commission Expires:

[SIGNATURE PAGE TO BILL OF SALE]

SCHEDULE 1 – LEGAL DESCRIPTION

[to be provided by Administrative Agent on or before Closing]

EXHIBIT F

FORM OF DEED

APN:

Recording Requested by and

when recorded, return to:

Joel L. Wiegert

Kutak Rock LLP

The Omaha Building

1650 Farnam Street

Omaha, NE 68102

Mail Tax Statements to:

Deed In Lieu of Foreclosure

[_______________], a Delaware limited liability company (“Grantor”), for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby grant, bargain, sell and convey to: [______________], a Delaware limited liability company (“Grantee”), all that real property, bounded and described as follows:

SEE SCHEDULE 1 ATTACHED HERETO

Together with all buildings, structures, facilities, fixtures and other improvements on and under such real property, and all rights, titles, estates, leasehold interests, powers, privileges, licenses, rights of way, easements and other tenements, hereditaments and appurtenances, including easements, water and mineral rights thereunto belonging or in anywise appertaining, and any reversions, remainders, rents, issues or profits thereof (the real property described on Schedule 1 attached hereto, together with the property and interests hereinbefore described are referred to herein, collectively, as the “Property”).

AS A MATERIAL INDUCEMENT TO THE GRANTEE TO ACCEPT THIS DEED, THE GRANTOR DECLARES, REPRESENTS AND ACKNOWLEDGES AS FOLLOWS:

This Deed is an absolute and outright grant and conveyance of the Property to the Grantee, and is not intended as a mortgage, trust conveyance, security agreement or security interest of any kind. The Grantor intends by this Deed to convey to the Grantee all of the Grantor’s right, title, and interest absolutely in and to the Property (including, without limitation, all equity and right and redemption, and right of reinstatement), and the Grantor has unconditionally surrendered possession and control of the Property to the Grantee concurrently with the delivery of this Deed.

In delivering this Deed, the Grantor has acted freely and voluntarily, without any misapprehension as to the effect of this Deed and free from any coercion or duress.

The Grantor fully believes that it is conveying the Property to the Grantee for full, fair and adequate consideration.

Title to the Property is encumbered by the lien of a first priority [Future Advance Mortgage, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing dated as of September 25, 2006 (as amended and supplemented from time to time, the “Security Instrument”) by Grantor in favor of Deutsche Bank Trust Company Americas, as Collateral Agent, and recorded in the Office of the County Recorder of Martin County, Minnesota on September 27, 2006 as Document No. 2006R-385938][Fee Simple and Leasehold Deed of Trust, Security Agreement, Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing dated as of September 25, 2006 (as amended and supplemented from time to time, the “Security Instrument”) by Grantor in favor of First American Title Insurance Company, as trustee for the benefit of Deutsche Bank Trust Company Americas, as Collateral Agent, and recorded with the Register of Deeds for Buffalo County, Nebraska on December 21, 2006 as Instrument No. 2006-9710, and with the Register of Deeds for Hall County, Nebraska on October 3, 2006 as Instrument No. 0200608869].

The Grantor hereby conveys title to the Grantee in satisfaction of Grantor’s obligations with respect to a mortgage debt evidenced by the Financing Documents (as hereinafter described) and as a substitute for foreclosure, subject in all respects to the terms and conditions of that certain Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions dated as of April 11, 2013 (the “Agreement”) among the Grantor, [BFE Operating Company, LLC, Buffalo Lake Energy, LLC, Pioneer Trail Energy, LLC], First National Bank of Omaha, as Administrative Agent and Collateral Agent, and the Lenders party thereto. The Grantor and the Grantee intend and agree that (i) the Security Instrument and the other documents, instruments and agreements evidencing and securing the indebtedness secured by the Security Instrument (collectively, the “Financing Documents”) shall not be extinguished or impaired by the execution, delivery and recordation of this Deed, (ii) the Property shall remain subject to the Security Instrument and the other Financing Documents, it being the express intent of the Grantor and the Grantee that the liens and interest in the Property under the Security Instrument and the other Financing Documents shall not merge with or into the Grantee’s interest in the Property under this Deed, or otherwise be impaired in any manner, and that such liens and interests shall remain separate, distinct, and independent, and (iii) the holder of the Security Instrument shall continue to have and enjoy the right to foreclose against the Property under the Security Instrument either by judicial action or power of sale.

2

The Grantor has made the foregoing declarations, representations and acknowledgments for the protection and benefit of the Grantee, the Grantee’s successors and assigns, and all other parties that may hereafter acquire any ownership, lien, or other interest of any nature in the Property or any portion thereof, and also for the protection and benefit of any title insurer that may now or hereafter in any manner insure the condition of title to the Property.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

EXECUTION PAGE FOLLOWS]

3

IN WITNESS WHEREOF, the Grantor has executed this Deed in Lieu of Foreclosure as of the date first above written.

GRANTOR:
[BUFFALO LAKE ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:
PIONEER TRAIL ENERGY, LLC, a Delaware limited liability company
By:
Name:
Title:	]

STATE OF COLORADO    )

                                                ) ss.

COUNTY OF                       ) 

The foregoing instrument was acknowledged before me this               day of                   , 2013, by                           , a member of                               .

WITNESS my hand and official seal.

	Notary Public
My Commission Expires:

[SIGNATURE DEED IN LIEU OF FORECLOSURE]

SCHEDULE 1 – LEGAL DESCRIPTION

[to be provided by Administrative Agent on or before Closing]

SCHEDULE I

BUFFALO LAKE TANGIBLE PERSONAL PROPERTY

· All tangible Buffalo Lake Personal Property*

*Detailed Schedule may be provided on or prior to Closing.

SCHEDULE II

OPCO TANGIBLE PERSONAL PROPERTY

· All tangible Opco Personal Property*

*Detailed Schedule may be provided on or prior to Closing.

SCHEDULE III

PIONEER TRAIL TANGIBLE PERSONAL PROPERTY

· All tangible Pioneer Trail Personal Property*

*Detailed Schedule may be provided on or prior to Closing.

SCHEDULE IV

Litigation, Zoning, Environmental and Tax Assessment Disclosures

[to be provided by Borrowers]

SCHEDULE V

facility documents

BUFFALO LAKE

1. AGREEMENT FOR ENGINEERING, PROCUREMENT AND CONSTRUCTION, dated as of June 9, 2006, by and between BUFFALO LAKE ENERGY, LLC and TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

a. CONTRACT AMENDMENT NO. 1, dated as of July 1, 2008, by and between BUFFALO LAKE ENERGY, LLC and TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

2. LICENSE OF TECHNOLOGY BETWEEN DELTA-T CORPORATION AND BUFFALO LAKE ENERGY, LLC, dated as of August 6, 2006, by and between DELTA-T CORPORATION and BUFFALO LAKE ENERGY, LLC.

3. CORN SUPPLY AGREEMENT, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and BUFFALO LAKE ENERGY, LLC.

4. DISTILLERS GRAINS MARKETING AGREEMENT, dated as of September 25, 2006, by and between CARGILL, INCORPORATED, and BUFFALO LAKE ENERGY, LLC.

5. ETHANOL MARKETING AGREEMENT, dated as of September 25, 2006, by and between CARGILL, INCORPORATED, and BUFFALO LAKE ENERGY, LLC.

6. MASTER AGREEMENT, dated as of September 25, 2006, by and among CARGILL, INCORPORATED, GARGILL COMMODITY SERVICES, INC. and BUFFALO LAKE ENERGY, LLC.

7. GRAIN FACILITY LEASE, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and BUFFALO LAKE ENERGY, LLC.

a. MEMORANDUM OF GRAIN FACILITY LEASE, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and BUFFALO LAKE ENERGY, LLC.

8. PAYMENT AND PERFORMANCE BOND (Private Work), dated as of December 13, 2006, by and between TIC – THE INDUSTRIAL COMPANY WYOMING, INC., as Principal, FEDERAL INSURANCE COMPANY, TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA and FIDELITY AND DEPOSIT COMPANY OF MARYLAND, as Sureties, and BUFFALO LAKE ENERGY, LLC, as Obligee.

a. DUAL OBLIGEE RIDER (Concurrent Execution), dated as of December 13, 2006.

9. ACCESS AND INDEMNITY AGREEMENT, dated as of May 4, 2007, by and between CARGILL, INCORPORATED and BUFFALO LAKE ENERGY, LLC.

a. Letter regarding Access and Indemnity Agreement, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and BUFFALO LAKE ENERGY, LLC.

10. FUTURES ADVISORY AGREEMENT, dated as of September 25 2006, by and between CARGILL COMMODITY SERVICES INC. and BUFFALO LAKE ENERGY, LLC.

11. PIPELINE CONTSRUCTION AGREEMENT, dated as of April 27, 2007, by and between BUFFALO LAKE ENERGY, LLC and BEAR CUB INVESTMENTS, LLC.

12. MANAGEMENT SERVICES AGREEMENT, dated as of April 20, 2007, by and between BUFFALO LAKE ENERGY, LLC and BIOFUEL ENERGY, LLC.

13. ESCROW AGREEMENT, dated as of September 25, 2006, by and among CARGILL, INCORPORATED, BUFFALO LAKE ENERGY, LLC, PIONEER TRAIL ENERGY, LLC and DEUTSCHE BANK TRUST COMPANY AMERICAS.

14. INDUSTRY TRACK CONTRACT ARTICLES OF AGREEMENT, dated as of July 20, 2001, by and between UNION PACIFIC RAILROAD COMPANY and CARGILL, INCORPORATED.

15. AGREEMENT FOR ELECRIC SERVICE, dated as of December 29, 2006, by and between FEDERATED RURAL ELECTRIC ASSOCIATION and BUFFALO LAKE ENERGY, LLC.

16. INTERCONNECT AGREEMENT, dated as of January 16, 2007, by and between BUFFALO LAKE ENERGY, LLC and NORTHERN BORDER PIPELINE COMPANY.

17. ACCESS EASEMENT AGREEMENT, dated as of May 2, 2007, by and between BUFFALO LAKE ENERGY, LLC, KAYTON & RABE, L.L.P. and CITY OF FAIRMONT.

a. CONSENT OF MORTGAGEE, dated as of April 27, 2007, executed by DEUTSCHE BANK TRUST COMPANY AMERICAS.

b. AMENDED AND RESTATED ACCESS EASEMENT AGREEMENT, dated as of May 2, 2007, by and between KAYTON & RABE, L.L.P. and BUFFALO LAKE ENERGY, LLC.

i. CONSENT OF MORTGAGEE, dated as of April 27, 2007, executed by DEUTSCHE BANK TRUST COMPANY AMERICAS.

2

18. AMENDED AND RESTATED PARKING EASEMENT AGREEMENT, dated as of May 2, 2007, by and between BUFFALO LAKE ENERGY, LLC and KAYTON & RABE, L.L.P.

a. CONSENT OF MORTGAGEE, dated as of April 27, 2007, executed by DEUTSCHE BANK TRUST COMPANY AMERICAS.

19. BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS, dated as of January 1, 2008, by and between BP CANADA ENERGY MARKETING CORP. and BUFFALO LAKE ENERGY, LLC.

20. TRINITY INDUSTRIES LEASING COMPANY RAILROAD CAR LEASE AGREEMENT, dated as of October 12, 2006, by and between TRINITY INDUSTRIES LEASING COMPANY and BUFFALO LAKE ENERGY, LLC.

a. RIDER ONE (1) TO RAILROAD CAR LEASE AGREEMENT, dated as of October 12, 2006, by and between TRINITY INDUSTRIES LEASING COMPANY and BUFFALO LAKE ENERGY, LLC.

b. RIDER TWO (2) TO RAILROAD CAR LEASE AGREEMENT, dated as of October 12, 2006, by and between TRINITY INDUSTRIES LEASING COMPANY and BUFFALO LAKE ENERGY, LLC.

c. FIRST AMENDMENT TO TRINITY INDUSTRIES LEASING COMPANY RAILROAD CAR LEASE AGREEMENT WITH BUFFALO LAKE ENERGY, LLC DATED THE 12^TH DAY OF OCTOBER, 2006, dated as of August 23, 2007, by and between BUFFALO LAKE ENERGY, LLC and TRINITY INDUSTRIES LEASING COMPANY.

d. TOGETHER WITH ALL SUBLEASES BY BUFFALO LAKE OF ITS INTEREST UNDER SUCH LEASE AGREEMENT.

21. BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS, dated as of January 1, 2008, by and between BP CANADA ENERGY MARKETING CORP. and BUFFALO LAKE ENERGY, LLC.

22. OPERATION AND MAINTENANCE AGREEMENT, dated as of November 2, 2007, by and between NORTHWEST NATURAL GAS, LLC and BUFFALO LAKE ENERGY, LLC.

23. OPERATION AND MAINTENANCE AGREEMENT, dated as of November 7, 2007, by and between NORTHWEST NATURAL GAS, LLC and BUFFALO LAKE ENERGY, LLC.

24. CONTRACT AGREEMENT, dated as of May 25, 2007, by and between BUFFALO LAKE ENERGY, LLC and RAILWORKS TRACK SYSTEMS, INC.

3

25. NORTHERN BORDER PIPELINE COMPANY OPERATIONAL BALANCING AGREEMENT, dated as of March 10, 2008, by and between NORTHERN BORDER PIPELINE COMPANY and BUFFALO LAKE ENERGY, LLC.

26. AGREEMENT AND OMNIBUS AMENDMENT, dated as of July 30, 2009, by and among BUFFALO LAKE ENERGY, LLC, CARGILL, INCORPORATED and CARGILL COMMODITY SERVICES, INC.

27. AGREEMENT, dated as of December 11, 2008, by and between BUFFALO LAKE ENERGY, LLC and TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

28. ETHANOL RAILCAR EXCHANGE AGREEMENT, dated as of May 15, 2008, by and between CARGILL, INCORPORATED and BUFFALO LAKE ENERGY, LLC.

29. ETHANOL RAILCAR EXCHANGE AGREEMENT, dated as of May 15, 2008, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

30. BUFFALO LAKE CONSTRUCTION REQUISITION, dated as of May 22, 2007, executed by BFE OPERATING COMPANY, LLC.

31. UNION PACIFIC RAIL ACCESS MEMORANDUM OF UNDERSTANDING, by and between BUFFALO LAKE ENERGY, LLC and UNION PACIFIC RAILROAD COMPANY.

32. NOTICE TO PROCEED, dated as of July 27, 2006, by BUFFALO LAKE ENERGY, LLC and agreed to by TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

33. THE CORN OIL LEASES

PIONEER TRAIL ENERGY, LLC PROJECT DOCUMENTS

1. AGREEMENT FOR ENGINEERING, PROCUREMENT AND CONTSRUCTION, dated as of April 28, 2006, by and between PIONEER TRAIL ENERGY, LLC and TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

a. FIRST AMENDMENT TO AGREEMENT FOR ENGINEERING, PROCUREMENT AND CONSTRUCTION, dated as of July 28, 2006, by and between PIONEER TRAIL ENERGY, LLC and TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

b. CONTRACT AMENDMENT NO. 2, dated as of July 1, 2008, by and between PIONEER TRAIL ENERGY, LLC and TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

2. LICENSE OF TECHNOLOGY BETWEEN DELTA-T CORPORATION AND PIONEER TRAIL, LLC, dated as of April 28, 2006, by and between DELTA-T CORPORATION and PIONEER TRAIL, LLC.

4

3. CORN SUPPLY AGREEMENT, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

a. Letter regarding Corn Supply Agreement, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

4. DISTILLERS GRAINS MARKETING AGREEMENT, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

5. ETHANOL MARKETING AGREEMENT, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERTY, LLC.

6. MASTER AGREEMENT, dated as of September 25, 2006, by and among GARGILL, INCORPORATED, CARGILL COMMODOTY SERVICES, INC., BFE OPERATING COMPANY, LLC and PIONEER TRAIL ENERGY, LLC.

7. GRAIN FACILITY LEASE AND SUBLEASE, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

a. MEMORANDUM OF GRAIN FACILITY LEASE AND SUBLEASE, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

8. PAYMENT AND PERFORMANCE BOND (Private Work), dated as of December 13, 2006, by and between TIC – THE INDUSTRIAL COMPANY WYOMING, INC., as Principal, FEDERAL INSURANCE COMPANY, TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA and FIDELITY AND DEPOSIT COMPANY OF MARYLAND, as Sureties, and PIONEER TRAIL ENERGY, LLC, as Obligee.

a. DUAL OBLIGEE RIDER (Concurrent Execution), dated as of December 13, 2006.

9. ADOPTION AGREEMENT, dated as of June 26, 1979, by and between UNION PACIFIC RAILROAD COMPANY and CARGILL, INCORPORATED.

10. INDUSTRY TRACK CONTRACT, dated as of June 15, 1977, by and between UNION PACIFIC RAILROAD COMPANY and CARGILL, INCORPORATED.

11. INDUSTRY TRACK CONTRACT, dated as of December 21, 1979, by and among UNION PACIFIC RAILROAD COMPANY, FARMERS COOPERATIVE ELEVATOR COMPANY and THELEN GRAIN COMPANY.

a. SUPPLEMENTAL AGREEMENT, dated as of June 21, 1983, by and between UNION PACIFIC RAILROAD COMPANY and FARMERS COOPERATIVE ELEVATOR COMPANY.

5

b. ASSIGNMENT, dated as of January 24, 1985, by and among FARMERS COOPERATIVE ELEVATOR COMPANY, as Assignor, CARGILL, INCORPORATED, as Assignee, and UNION PACIFIC RAILROAD COMPANY.

12. ACCESS AND INDEMNITY AGREEMENT, dated as of May 4, 2007, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

a. Letter regarding Access and Indemnity Agreement, dated as of September 25, 2006, by and between CARGILL, INCORPORATED and PIONEER TRAIL ENERGY, LLC.

13. FUTURES ADVISORY AGREEMENT, dated as of September 25, 2006, by and between CARGILL COMMODITY SERVICES INC. and PIONEER TRAIL ENERGY, LLC.

14. INDUSTRY TRACK CONTRACT ARTICLES OF AGREEMENT, dated as of October 24, 1997, by and between UNION PACIFIC RAILROAD COMPANY and CARGILL, INCORPORATED.

15. LEASE, dated as of October 24, 1984, by and between UNION PACIFIC RAILROAD COMPANY, as Lessor, and CARGILL, INC., as Lessee.

a. CONSENT TO SUBLEASE, dated as of September 28, 2006, by and between UNION PACIFIC RAILROAD COMPANY, as Lessor, CARGILL, INC., as Lessee, and PIONEER TRAIL ENERGY, LLC, as Sublessee, with respect to Lease dated as of October 24, 1984.

16. LEASE, dated as of October 22, 1985, by and between UNION PACIFIC RAILROAD COMPANY, as Lessor, and CARGILL, INCORPORATED, as Lessee.

a. CONSENT TO SUBLEASE, dated as of September 28, 2006, by and between UNION PACIFIC RAILROAD COMPANY, as Lessor, CARGILL, INC., as Lessee, and PIONEER TRAIL ENERGY, LLC, as Sublessee, with respect to Lease dated as of October 22, 1985.

17. NATURAL GAS AGREEMENT, dated as of May 4, 2007, by and between PIONEER TRAIL ENERGY, LLC and CORNERSTONE ENERGY, INC.

a. ORDERING EXHIBIT, dated on or around May 4, 2007, by and between PIONEER TRAIL ENERGY, LLC and CORNERSTONE ENERGY, INC.

b. BASE AGREEMENT, dated as of May 5, 2007, by and between CORNERSTONE ENERGY, INC. and PIONEER TRAIL ENERGY, LLC.

18. ENGINEERING, PROCUREMENT, AND CONSTRUCTION AGREEMENT, dated as of March 30, 2007, by and between PIONEER TRAIL ENERGY, LLC and CORNERSTONE ENERGY, INC.

6

19. MANAGEMENT SERVICES AGREEMENT, dated as of April 20, 2007, by and between PIONEER TRAIL ENERGY, LLC and BIOFUEL ENERGY, LLC.

20. OPTION AGREEMENT, dated as of April 13, 2006, by and among ROZELLA M. LEISINGER and RICHARD K. LEISINGER, as Optionor, and PIONEER TRAIL ENERGY, LLC, as Optionee.

a. MEMORANDUM OF OPTION AGREEMENT, dated as of April 17, 2006, by and among ROZELLA M. LEISINGER and RICHARD K. LEISINGER, as Optionor, and PIONEER TRAIL ENERGY, LLC, as Optionee.

21. WATER RIGHTS DEED AND DECLARATION OF RESTRICTIVE COVENANTS AND EASEMENTS, dated as of December 15, 2006, by and among ROZELLA M. LEISINGER, RICHARD K. LEISINGER and PIONEER TRAIL ENERGY, LLC.

a. CONSENT OF TRUSTEE AND BENEFICIARY, dated as of December 14, 2006, by and between FIRST AMERICAN TITLE INSURANCE COMPANY and DEUTSCHE BANK TRUST COMPANY AMERICAS.

b. CONSENT OF MORTGAGEE, dated as of December 17, 2006, by and among VICKIE LEISINGER SIKES, CAROL LEISINGER OWEN and JANET LEISINGER RHONE.

22. DEED OF RECONVEYANCE, dated as of December 1, 2006, by and between STEVEN P. CASE and PIONEER TRAIL ENERGY, LLC., releasing Pioneer Trail Energy, LLC’s interest in that certain Deed of Trust and Assignment of Rents, dated as of July 5, 2006 and recorded July 7, 2006 in the Office of the Register of Deeds of Hall County, Nebraska.

23. PRECEDENT AGREEMENT, dated as of May 4, 2007, by and between KINDER MORGAN INTERSTATE GAS TRANSMISSION LLC and PIONEER TRAIL ENERGY, LLC.

a. FACILITIES INTERCONNECT AGREEMENT, dated as of May 4, 2007, by and between KINDER MORGAN INTERSTATE GAS TRANSMISSION LLC and PIONEER TRAIL ENERGY, LLC.

24. CITY OF WOOD RIVER LARGE POWER CONTRACT ELECTRIC SERVICE AGREEMENT, dated as of December 4, 2006, by and between CITY OF WOOD RIVER, NEBRASKA and PIONEER TRAIL ENERGY, LLC.

a. AGREEMENT TO TERMINATE LARGE POWER CONTRACT, dated as of May 31, 2008, by and between CITY OF WOOD RIVER, NEBRASKA and PIONEER TRAIL ENERGY, LLC.

7

25. TRINITY INDUSTRIES LEASING COMPANY RAILROAD CAR LEASE AGREEMENT, dated as of October 12, 2006, by and between TRINITY INDUSTRIES LEASING COMPANY and PIONEER TRAIL ENERGY, LLC.

a. RIDER ONE (1) TO RAILROAD CAR LEASE AGREEMENT, dated as of October 12, 2006, by and between TRINITY INDUSTRIES LEASING COMPANY and PIONEER TRAIL ENERGY, LLC.

b. RIDER TWO (2) TO RAILROAD CAR LEASE AGREEMENT, dated as of October 12, 2006, by and between TRINITY INDUSTRIES LEASING COMPANY and PIONEER TRAIL ENERGY, LLC.

c. FIRST AMENDMENT TO TRINITY INDUSTRIES LEASING COMPANY RAILROAD CAR LEASE AGREEMENT WITH BUFFALO LAKE ENERGY, LLC DATED THE 12^TH DAY OF OCTOBER, 2006, dated as of August 23, 2007, by and between PIONEER TRAIL ENERGY, LLC and TRINITY INDUSTRIES LEASING COMPANY.

d. TOGETHER WITH ALL SUBLEASES BY PIONEER, LLC OF ITS INTEREST UNDER SUCH LEASE AGREEMENT.

26. CONTRACT AGREEMENT, dated as of April 17, 2007, by and between PIONEER TRAIL ENERGY, LLC and RAILWORKS TRACK SYSTEMS, INC.

27. FACILITY JOINT LEASE AGREEMENT, dated as of June 2, 2008, by and among CITY OF WOOD RIVER, PIONEER TRAIL ENERGY, LLC and SOUTHERN PUBLIC POWER DISTRICT.

28. AGREEMENT AND OMNIBUS AMENDMENT, dated as of July 30, 2009, by and among PIONEER TRAIL ENERGY, LLC, CARGILL, INCORPORATED and CARGILL COMMODITY SERVICES, INC.

29. ACKNOWLEDGMENT AND CONSENT AGREEMENT (Electric Power Service Agreement), dated as of May 31, 2008, by and among SOUTHERN PUBLIC POWER DISTRICT, PIONEER TRAIL ENERGY, LLC and DEUTSCHE BANK TRUST COMPANY AMERICAS.

30. AGREEMENT, dated as of December 11, 2008, by and between PIONEER TRAIL ENERGY, LLC and TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

31. PIONEER TRAIL CONSTRUCTION REQUISITION, dated as of May 22, 2007, executed by BFE OPERATING COMPANY, LLC.

32. UNION PACIFIC RAIL ACCESS MEMORANDUM OF UNDERSTANDING, by and between PIONEER TRAIL ENERGY, LLC and UNION PACIFIC RAILROAD COMPANY.

8

33. NOTICE TO PROCEED, dated as of July 27, 2006, by PIONEER TRAIL ENERGY, LLC and agreed to by TIC – THE INDUSTRIAL COMPANY WYOMING, INC.

34. THE CORN OIL LEASES

Licenses and permits

BUFFALO LAKE

1. RADIO STATION AUTHORIZATION (0016983124) issued to Buffalo Lake Energy, LLC by the Federal Communications Commission on April 11, 2003.

2. MINNESOTA RIVER BASIN GENERAL PHOSPHORUS PERMIT – PHASE I (MNG420000) issued to BioFuel Solutions, LLC by the Minnesota Pollution Control Agency

3. NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM (NPDES)/STATE DISPOSAL SYSTEM (SDS) PERMIT MN0068063 issued to Buffalo Lake Energy LLC by the Minnesota Pollution Control Agency on August 23, 2006.

4. AIR EMISSION PERMIT NO. 09100061-001 issued to Cargill, Inc. by the Minnesota Pollution Control Agency on August 24, 2006.

5. PERMIT FOR STORAGE OF LIQUID SUBSTANCES AT A MAJOR ABOVEGROUND STORAGE TANK FACILITY (AST# 124223) issued to Buffalo Lake Energy, LLC by the Minnesota Pollution Control Agency on September 19, 2006.

6. WATER APPROPRIATION PERMIT (2006-0292) issued to Buffalo Lake Energy, LLC by the Minnesota Department of Natural Resources on April 18, 2007.

7. RADIO STATION AUTHORIZATION (0016983124) issued to Buffalo Lake Energy, LLC by the Federal Communications Commission on November 23, 2007.

8. HAZARDOUS MATERIALS CERTIFICATE OF REGISTRATION FOR REGISTRATION YEAR(S) 2007-2010 (022508 001 001PR) issued to Buffalo Lake Energy, LLC by the U.S. Department of Transportation on February 26, 2008.

9. ALCOHOL FUEL PRODUCER PERMIT (AFP-MN-15021) issued to Buffalo Lake Energy, LLC by the Department of the Treasury effective as of March 1, 2008

10. DISTRIBUTOR LICENSE issued to Buffalo Lake Energy, LLC by the Minnesota Department of Revenue on July 1, 2008.

11. RADIO STATION AUTHORIZATION (0018150482) issued to Buffalo Lake Energy, LLC by the Federal Communications Commission on November 10, 2008.

12. COMMERCIAL FEED LICENSE (20108189) issued to BioFuel Energy Corp. by the Minnesota Department of Agriculture on January 1, 2009.

13. HAZARDOUS MATERIALS SHIPPER CERTIFICATE OF REGISTRATION (UPR-374417-MN) issued to Buffalo Lake Energy, LLC by the Minnesota Department of Transportation, Office of Freight and Commercial Vehicle Operations on March 12, 2009.

14. AIR EMISSION PERMIT NO. 09100060-003 (Major Amendment) issued to BioFuel Solutions by the Minnesota Pollution Control Agency on April 9, 2009.

9

PIONEER TRAIL

1. REQUEST FOR VARIANCE (VRO6-080) approved by the Central Platte Natural Resources District on February 23, 2006.

2. REQUEST FOR VARIANCE (VRO6-081) approved by the Central Platte Natural Resources District on February 23, 2006.

3. REQUEST FOR VARIANCE (VRO6-082) approved by the Central Platte Natural Resources District on February 23, 2006.

4. REQUEST FOR VARIANCE (VRO6-083) approved by the Central Platte Natural Resources District on February 23, 2006.

5. REQUEST FOR VARIANCE (VRO6-084) approved by the Central Platte Natural Resources District on February 23, 2006.

6. CONSTRUCTION PERMIT – PERMIT TO CONSTRUCT AND AIR CONTAINMENT SOURCE (CP05-0030) issued to Pioneer Trail Energy, LLC by the Nebraska Department of Environmental Quality on March 6, 2006.

7. AUTHORIZATION FOR DISCHARGE OF STORM WATER given by the Nebraska Department of Environmental Quality on May 8, 2006.

8. MUNICIPAL & INDUSRTRIAL WATER WELL PERMIT APPLICATION (40-06-025) issued to Pioneer Trail Energy, LLC by the Central Platte Natural Resources District on June 6, 2006.

9. MUNICIPAL & INDUSRTRIAL WATER WELL PERMIT APPLICATION (40-06-026) issued to Pioneer Trail Energy, LLC by the Central Platte Natural Resources District on June 6, 2006.

10. MUNICIPAL & INDUSRTRIAL WATER WELL PERMIT APPLICATION (40-06-027) issued to Pioneer Trail Energy, LLC by the Central Platte Natural Resources District on June 6, 2006.

11. MUNICIPAL & INDUSRTRIAL WATER WELL PERMIT APPLICATION (40-06-028) issued to Pioneer Trail Energy, LLC by the Central Platte Natural Resources District on June 6, 2006.

12. PERMIT TO TRANSFER GROUNDWATER WITHIN THE CENTRAL PLATTE NATURAL RESOURCES DISTRICT (TLM 06-005) issued to Pioneer Trail Energy, LLC by the Central Platte Natural Resources District on June 13, 2006.

13. REVISED CONSTRUCTION PERMIT – PERMIT TO MODIFY AN AIR CONTAINMENT SOURCE (CP05-0049) issued to Cargill AgHorizons by the Nebraska Department of Environmental Quality on July 26, 2006.

14. UNIFORM LAND USE CONFIRMATION issued by the Hall County Regional Planning Commission on September 12, 2006.

15. AUTHORIZATION FOR DISCHARGE OF HYDROSTATIC TEST WATER given to Pioneer Trail Energy, LLC by the Nebraska Department of Environmental Quality on October 18, 2006.

10

16. CONSTRUCTION WELL DRILLING PERMIT issued to Pioneer Trail Energy, LLC by the City of Wood River, Nebraska on October 18, 2006.

17. PERMIT TO INSTALL ABOVEGROUND PETROLEUM TANKS (2006-0067) issued to BioFuel Energy, LLC by the Nebraska State Fire Marshal on November 30, 2006.

18. AUTHORIZATION TO DISCHARGE UNDER THE NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM (NPDES) (PCS 86000-P) issued to BioFuel Solutions, LLC by the Nebraska Department of Environmental Quality on January 10, 2007.

19. AIR QUALITY CONSTRUCTION PERMIT (CP06-0052) issued to Pioneer Trail Energy, LLC by the Nebraska Department of Environmental Quality on April 11, 2007.

20. APPROVAL TO OCCUPY RIGHT OF WAY given to Montana Dakota Utilities Co. by the Nebraska Department of Roads on May 4, 2007.

21. PERMIT TO PERFORM WORK ON PUBLIC RIGHT-OF-WAY (0-36883) issued to Montana Dakota Utilities Co. by the Nebraska Department of Roads on May 7, 2007.

22. PERMIT TO PERFORM WORK ON PUBLIC RIGHT-OF-WAY (921) issued to BioFuel Energy, LLC by the Hall County Highway Department on May 10, 2007.

23. FLOODPLAIN DEVELOPMENT PERMIT issued to Pioneer Trail Energy, LLC by Hall County, Nebraska on May 15, 2007.

24. WATER WELL REGISTRATION (11797598217253) issued by the Nebraska Department of Natural Resources on May 24, 2007.

25. WATER WELL REGISTRATION (117976157111991) issued by the Nebraska Department of Natural Resources on May 24, 2007.

26. WATER WELL REGISTRATION (11797622577245) issued by the Nebraska Department of Natural Resources on May 24, 2007.

27. WATER WELL REGISTRATION (11799289091116) issued by the Nebraska Department of Natural Resources on May 24, 2007.

28. AUTHORIZATION FOR DISCHARGE OF STORM WATER given to Montana-Dakota Utilities Co. by the Nebraska Department of Environmental Quality on September 19, 2007.

29. PERMIT TO OPERATE COMMERCIAL WEIGHING AND MEASURING DEVICES (004150 P 1) issued to BioFuel Energy Corp. by the Nebraska Department of Agriculture on January 17, 2008.

30. ALCOHOL FUEL PRODUCER PERMIT (AFP-NE-14162) issued to Pioneer Trail Energy, LLC by the Department of the Treasury effective as of March 1, 2008

a. Issuance of permit not confirmed (application submitted January 16, 2008)

31. STORM WATER DISCHARGE AUTHORIZATION (NEROO1215) given to Pioneer Trail Energy, LLC by the Nebraska Department of Environmental Quality on April 16, 2008.

32. CERTIFICATE OF INSPECTION (10216) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

11

33. CERTIFICATE OF INSPECTION (10217) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

34. CERTIFICATE OF INSPECTION (10218) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

35. CERTIFICATE OF INSPECTION (10219) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

36. CERTIFICATE OF INSPECTION (10220) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

37. CERTIFICATE OF INSPECTION (10221) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

38. CERTIFICATE OF INSPECTION (10222) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

39. CERTIFICATE OF INSPECTION (10223) issued to Pioneer Trail Ethanol by the Nebraska Department of Labor Boiler Inspection Program on April 30, 2008.

40. APPROVAL OF PRODUCERS LICENSE & PETROLEUM RELEASE REMEDIAL ACTION FEE TAX PROGRAM given to Pioneer Trail Energy, LLC by the Nebraska Department of Revenue effective May 2, 2008.

41. PLAN REVIEW/FINAL INSPECTION approval given to Pioneer Trail Energy, LLC by the Nebraska State Fire Marshal on August 17, 2008.

42. STATE CONSTRUCTION PERMIT (08-0109) issued to Pioneer Trail Energy, LLC by the Nebraska Department of Environmental Quality on August 18, 2008.

43. APPROVAL OF APPLICATION FOR REGISTRATION (FOR CERTAIN EXCISE TAX TRANSACTIONS) (2008-005284-AF-W) issued to Pioneer Trail Energy, LLC by the Department of the Treasury on August 19, 2008.

44. HAZARDOUS MATERIALS CERTIFICATE OF REGISTRATION FOR REGISTRATION YEAR(S) 2007-2010 (082508 006 019PR) issued to Pioneer Trail Energy, LLC by the U.S. Department of Transportation on August 25, 2008.

45. PERMIT FOR FEED issued to Pioneer Trail Energy, LLC by the Nebraska Department of Agriculture on December 11, 2008.

46. AIR QUALITY CONSTRUCTION PERMIT (CP08-016) issued to Pioneer Trail Energy, LLC by the Nebraska Department of Environmental Quality on December 16, 2008.

47. NPDES GENERAL PERMIT FOR STORM WATER DISCHARGES FROM CONSTRUCTION SITES (NER1000000) issued to Pioneer Trail Energy by the Nebraska Department of Environmental Quality.

48. NPDES FORM CSW-START – NOTICE OF START-UP OF CONSTRUCTION ACTIVITY (NER104829) issued to Pioneer Trail Energy by the Nebraska Department of Environmental Quality.

49. NPDES FORM CSW-END – NOTICE OF COMPLETION OF CONSTRUCTION ACTIVITY (NER104829) issued to Pioneer Trail Energy by the Nebraska Department of Environmental Quality.

12

50. NPDES FORM CSW-START – NOTICE OF START-UP OF CONSTRUCTION ACTIVITY (NER105658) issued to Pioneer Trail Energy by the Nebraska Department of Environmental Quality.

51. NPDES FORM CSW-END – NOTICE OF COMPLETION OF CONSTRUCTION ACTIVITY (NER105658) issued to Pioneer Trail Energy by the Nebraska Department of Environmental Quality.

52. AIR QUALITY OPERATING PERMIT prepare for Pioneer Trail Energy, LLC

53. AIR QUALITY CLASS II OPERATING PERMIT for Pioneer Trail Energy, LLC and Cargill AgHorizons

*Above Schedule may be modified or amended by Administrative Agent on or prior to Closing.

13

SCHEDULE VI

fee disclosures

· $1,150,000 payable to Houlihan Lokey in connection with a third party sale of the Facilities pursuant to the Escrow Agreement

SCHEDULE VII

Leases

· All Leases described on Schedule V hereto

*Above Schedule may be modified or amended by Administrative Agent on or prior to Closing.

SCHEDULE VIII

SERVICE CONTRACTS

· All Service Contracts described on Schedule V hereto

*Above Schedule may be modified or amended by Administrative Agent on or prior to Closing.

SCHEDULE IX

ACCEPTED SERVICE CONTRACTS

[to be provided by Administrative Agent on or prior to Closing]

SCHEDULE X

excluded assets

· Existing Kinder Morgan deposit made by Parent

SCHEDULE XI

SCHEDULE OF CLOSING PAYMENTS

Accounts Payable	Acquiring Entities  to pay through escrow on behalf of Borrowers at closing or within stated credit terms A/P relating to goods and services delivered prior to closing, subject to review and approval by Administrative Agent of final A/P schedule as of the closing date
Federated Rural Electric Service Contract	Acquiring Entities to assume at closing
Installment Sales Contract - Caterpillar Front Loader	Acquiring Entities  to assume at closing
Payroll and Accrued Benefit Obligations	Accrued unpaid payroll, flex spending and vacation obligations through the closing date to be paid by Acquiring Entities through escrow on behalf of Borrowers, subject to review and approval by Administrative Agent of final schedule of such accrued obligations as of the closing date. For avoidance of doubt, no payroll, insurance, retirement or other employment benefit plans will be assumed by NewCo in connection with the transactions contemplated hereby.
Zero Liquid Discharge	Acquiring Entities will assume consistent with IZLD expenditure budget

SCHEDULE XII

OPERATING AGREEMENT TERMS AND CONDITIONS

*To be provided by Administrative Agent on or prior to Closing.

SCHEDULE XIII

DESIGNATED EMPLOYEES

*To be provided by Administrative Agent on or prior to Closing.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Scott H. Pearce, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BioFuel Energy Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2013	/s/ Scott H. Pearce
	Scott H. Pearce
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kelly G. Maguire, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BioFuel Energy Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 14, 2013	/s/ Kelly G. Maguire
	Kelly G. Maguire
	Executive Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BioFuel Energy, Corp. (the “Corporation”) on Form 10-Q for the quarterly period ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott H. Pearce, President and Chief Executive Officer of the Corporation, certify to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date:  May 14, 2013	/s/ Scott H. Pearce
	Scott H. Pearce
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BioFuel Energy, Corp. (the “Corporation”) on Form 10-Q for the quarterly period ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kelly G. Maguire, Executive Vice President and Chief Financial Officer of the Corporation, certify to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date:  May 14, 2013	/s/ Kelly G. Maguire
	Kelly G. Maguire
	Executive Vice President and
	Chief Financial Officer

EX-99.1

NEWS RELEASE

BIOFUEL ENERGY REPORTS FIRST QUARTER 2013 RESULTS

DENVER, COLORADO – MAY 14, 2013 – BIOFUEL ENERGY CORP. (NASDAQ:BIOF), an ethanol production company, today announced its first quarter 2013 results. For the quarter ended March 31, 2013, the net loss was $5.3 million on revenues of $89.0 million, compared with a net loss of $11.1 million on revenues of $139.4 million for the quarter ended March 31, 2012. For the quarter ended March 31, 2013, the net loss attributable to common stockholders was $4.6 million, or $0.87 per share, while for the three months ended March 31, 2012 the net loss attributable to common stockholders was $9.4 million, or $1.83 per share.

For the quarter ended March 31, 2013, the Company’s operating loss was $4.9 million, which resulted from $90.9 million in cost of goods sold and $3.0 million in general and administrative expenses. During the first quarter of 2013, the Company also had $1.5 million of other income while incurring $1.9 million in interest expense, which resulted in a net loss of $5.3 million. For the same period of 2012, our operating loss was $9.3 million, which resulted from $145.9 million in cost of goods sold and $2.7 million in general and administrative expenses. The Company also had $1.8 million of interest expense in the first quarter of 2012, which resulted in a net loss of $11.1 million. At March 31, 2013, the Company had $9.6 million of cash and cash equivalents, of which $8.3 million was held at the parent and $1.3 million was held at the operating subsidiaries.

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 110 million gallons per year ethanol plants in the Midwestern corn belt.

###

Contact:	Kelly G. Maguire	For more information:
	Executive Vice President &	www.bfenergy.com
	Chief Financial Officer
	(303) 640-6500
	kmaguire@bfenergy.com

1600 Broadway, Suite 2200• Denver, CO • 303.640-6500 • www.bfenergy.com

 BioFuel Energy Corp.  

(in thousands, except per share amounts)

	Three Months Ended March 31,
Summary Income Statement	2013			2012
Net Sales	$	89,041		$	139,413
Cost of good sold		90,912			145,933
Gross loss		(1,871	)		(6,520	)
General and administrative expenses:
Compensation expense		1,310			1,804
Other		1,721			931
Operating loss		(4,902	)		(9,255	)
Other income		1,459			-
Interest expense		(1,885	)		(1,838	)
Net loss		(5,328	)		(11,093	)
Less: Net loss attributable to the noncontrolling interest		693			1,685
Net loss attributable to BioFuel Energy Corp. common stockholders	$	(4,635	)	$	(9,408	)
Loss per share-basic and diluted attributable to BioFuel Energy Corp. common stockholders	$	(0.87	)	$	(1.83	)
Weighted average shares outstanding-basic and diluted		5,308			5,140
Additional Operational Data
Ethanol sold (gallons, in thousands)		27,573.4			51,970.9
Dry distillers grain sold (tons, in thousands)		8.9			54.0
Wet distillers grain sold (tons, in thousands)		204.6			251.4
Corn oil sold (pounds, in thousands)		7,410.0			6,842.0
Corn ground (bushels, in thousands)		9,758.8			18,855.6
		March 31,			December 31,
Summary Balance Sheet		2013			2012
Cash and cash equivalents	$	9,615		$	9,323
Accounts receivable		15,546			9,256
Inventories		12,040			13,443
Deposits		3,074			3,074
Prepaid expenses		954			882
Other current assets		23			78
Property, plant and equipment, net		203,299			209,645
Debt issuance costs, net		1,490			1,739
Other non-current assets		2,983			2,983
Total assets	$	249,024		$	250,423
Total current liabilities	$	188,936		$	185,171
Long-term debt, net of current portion		2,766			2,795
Tax increment financing, net of current portion		4,275			4,275
Other non-current liabilities		3,006			3,072
Total liabilities		198,983			195,313
BioFuel Energy Corp. stockholders' equity		51,854			56,230
Noncontrolling interest		(1,813	)		(1,120	)
Total equity		50,041			55,110
Total liabilities and equity	$	249,024		$	250,423
		Three Months Ended March 31,
Reconciliation of Net Loss to EBITDA		2013			2012
Net loss	$	(5,328	)	$	(11,093	)
Interest expense		1,885			1,838
Depreciation and amortization expense included in cost of goods sold		6,580			6,530
Depreciation and amortization expense included in G&A expenses		261			267
EBITDA	$	3,398		$	(2,458	)

1600 Broadway, Suite 2200• Denver, CO • 303.640-6500 • www.bfenergy.com

XML

Earnings Per Share (Details Textual)	1 Months Ended	3 Months Ended
	Jun. 30, 2012	Mar. 31, 2013	Mar. 31, 2012
Reverse Stock Split Outstanding Common Stock Ratio	one-for-twenty
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		69,349	72,906

XML

Income Taxes (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Operating Loss Carryforwards	$ 242.4
Operating Loss Carryforwards, Expiration Dates	December 31, 2028
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	35.00%

XML

Stock-Based Compensation (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2013
Shares Options outstanding, January 1, 2013 (in shares)	71,237
Shares Granted (in shares)	0
Shares Exercised (in shares)	0
Shares Forfeited (in shares)	(1,888)
Shares Options outstanding, March 31, 2013 (in shares)	69,349
Shares Options exercisable, March 31, 2013 (in shares)	69,349
Weighted Average Exercise Price Options outstanding, January 1, 2013 (in dollars per share)	$ 61.72
Weighted Average Exercise Price Granted (in dollars per share)	$ 0
Weighted Average Exercise Price Exercised (in dollars per share)	$ 0
Weighted Average Exercise Price Forfeited (in dollars per share)	$ 117.46
Weighted Average Exercise Price Options outstanding, March 31, 2013 (in dollars per share)	$ 60.20
Weighted Average Exercise Price Options exercisable, March 31, 2013 (in dollars per share)	$ 60.20
Weighted Average Remaining Life (years) Options outstanding, March 31, 2013	1 year 8 months 12 days
Weighted Average Remaining Life (years) Options exercisable, March 31, 2013	1 year 8 months 12 days
Aggregate Intrinsic Value Options outstanding, March 31, 2013	$ 0
Aggregate Intrinsic Value Options exercisable, March 31, 2013	$ 0

XML

Employee Benefit Plans (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Description Of Employee Participation In Employee Benefit Plans	The LLC sponsors a 401(k) profit sharing and savings plan for its employees. Employee participation in this plan is voluntary and the LLC matches 50% of eligible employee contributions, up to an amount equal to 3% of employee compensation, on a biweekly basis.
Defined Benefit Plan, Contributions by Plan Participants	$ 47,000	$ 83,000

XML

Derivative Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Derivative not designated as hedging instrument:
Net amount recognized in earnings	$ 0	$ (690)
Commodity Contract [Member] | Sales [Member]
Derivative not designated as hedging instrument:
Net amount recognized in earnings	0	(880)
Commodity Contract [Member] | Cost Of Sales [Member]
Derivative not designated as hedging instrument:
Net amount recognized in earnings	$ 0	$ 190

XML

Summary of Significant Accounting Policies (Details 1)	3 Months Ended
	Mar. 31, 2013
Maximum [Member] | Land Improvements [Member]
Property, Plant and Equipment, Useful Life, Maximum	30 years
Maximum [Member] | Building Improvements [Member]
Property, Plant and Equipment, Useful Life, Maximum	40 years
Maximum [Member] | Railroad Transportation Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	39 years
Maximum [Member] | Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	39 years
Maximum [Member] | Other Capitalized Property Plant and Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	7 years
Maximum [Member] | Office Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	10 years
Minimum [Member] | Land Improvements [Member]
Property, Plant and Equipment, Useful Life, Maximum	20 years
Minimum [Member] | Building Improvements [Member]
Property, Plant and Equipment, Useful Life, Maximum	7 years
Minimum [Member] | Railroad Transportation Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	20 years
Minimum [Member] | Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	20 years
Minimum [Member] | Other Capitalized Property Plant and Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	5 years
Minimum [Member] | Office Equipment [Member]
Property, Plant and Equipment, Useful Life, Maximum	3 years

XML

Commitments and Contingencies (Details Textual) (USD $)	3 Months Ended		12 Months Ended	3 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2013 Fairmont Plant [Member] gal	Dec. 31, 2010 Fairmont Plant [Member]	Dec. 31, 2008 Fairmont Plant [Member]	Mar. 31, 2013 Wood River Plant [Member]	Dec. 31, 2010 Wood River Plant [Member]	Dec. 31, 2008 Wood River Plant [Member]
Deferred Lease Payments	$ 1,600,000
Subsidiaries Leasing Amount Per Year	6,700,000
Operating Lease Rent Expense Paid By Each Subsidiary Per Year			4,300,000
Operating Leases, Rent Expense	2,861,000	2,822,000
Origination Fee Per Bushel Under Lease Agreements	$ 0.048
Minimum Annual Origination Fee Payable	1,200,000
Number Of Bushels Contracted To Purchase				63,000			7,367,000
Percentage Of Purchase Commitments Of Projected Requirements							18.00%
Percentage Of Minimum Annual Commissions Payable In Average Selling Price	1.00%
Minimum Annual Operating Lease Payments					50,000	1,200,000		250,000	1,500,000
Number Of Gallons Of Ethanol				82,500,000
Deferred Ethanol Commissions	1,000,000
Intial Mininum Annual Lease Payments						$ 800,000			$ 1,000,000
Mileage Limit For Escalation Of Monthly Rental Charges	30,000
Term Of Operating Lease						20 years			20 years

XML

Tax Increment Financing (Tables)

3 Months Ended

Mar. 31, 2013

Tax Increment Financing [Abstract]

Schedule Of Maturities Of Tax Increment Financing Debt [Table Text Block]

The following table summarizes the aggregate maturities of the tax increment financing debt as of March 31, 2013 (in thousands):

Remainder of 2013	$	399
2014		431
2015		464
2016		501
2017		540
Thereafter		2,339
Total	$	4,674

XML

Stock-Based Compensation (Details 3) (USD $)	3 Months Ended
	Mar. 31, 2013
Shares Restricted stock outstanding, January 1, 2013 (in shares)	143,026
Shares Granted (in shares)	0
Shares Vested (in shares)	(41,798)
Shares Cancelled or expired (in shares)	0
Shares Restricted stock outstanding, March 31, 2013 (in shares)	101,228
Weighted Average Grant Date Fair Value per Award Restricted stock outstanding, January 1, 2013 (in dollars per share)	$ 13.82
Weighted Average Grant Date Fair Value per Award Granted (in dollars per share)	$ 0
Weighted Average Grant Date Fair Value per Award Vested (in dollars per share)	$ 14.40
Weighted Average Grant Date Fair Value per Award Cancelled or expired (in dollars per share)	$ 0
Weighted Average Grant Date Fair Value per Award Restricted stock outstanding, March 31, 2013 (in dollars per share)	$ 13.58
Aggregate Intrinsic Value Restricted stock outstanding, March 31, 2013	$ 517,275

XML

Long-Term Debt (Details Textual) (USD $)	3 Months Ended		3 Months Ended		1 Months Ended	3 Months Ended		3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 City Wood River Facility [Member]	Dec. 31, 2012 City Wood River Facility [Member]	Oct. 31, 2012 Senior Debt Facility [Member]	Mar. 31, 2013 Senior Debt Facility [Member]	Sep. 28, 2012 Senior Debt Facility [Member]	Mar. 31, 2013 Capital Lease Obligations [Member]	Mar. 31, 2008 Capital Lease Obligations [Member]
Debt Instrument, Periodic Payment			$ 58,000	$ 9,000		$ 3,150,000
Long-term Debt, Gross						170,500,000
Debt Instrument, Description of Variable Rate Basis						Interest rates on the Senior Debt Facility are, at management's option, set at: i) a base rate, which is the higher of the federal funds rate plus 0.5% or the administrative agent's prime rate, in each case plus a margin of 2.0%; or ii) at LIBOR plus 3.0%. Interest on base rate loans is payable quarterly and, depending on the LIBOR rate elected, as frequently as monthly on LIBOR loans, but no less frequently than quarterly. In addition, since the Operating Subsidiaries defaulted on their payments of principal and interest in September 2012, those unpaid balances have accrued interest at a penalty rate of 8.3%. The interest rate in effect on the borrowings at both March 31, 2013 and December 31, 2012 was 3.2%.
Management Fee Monthly					260,000	884,000
Debt Issuance Costs						7,900,000
Debt issuance costs, net	1,490,000	1,739,000				1,400,000
Fixed Facilities Charges Monthly Based On Cost Of Substation and Distribution Facility								34,000
Minimum Energy Charge									25,000
Proceeds from Notes Payable			419,000
Total	173,401,000	173,429,000				12,900,000	3,600,000
Debt Instrument Of First Required Payment1				208,000
Debt Instrument, Interest Rate During Period			6.50%	6.00%
Debt Instrument, Maturity Date, Description			2018	2014
Debt Instrument, Maturity Date						Sep. 30, 2014
Term Of Capital Lease								30 years
Escrow Deposit	$ 938,000
Business Acquisition, Equity Interest Issued or Issuable, Description	the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

XML

Property, Plant and Equipment (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Depreciation	$ 6,841,000	$ 6,797,000

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Tax benefit at 35% federal statutory rate	$ 1,865	$ 3,883
State tax benefit, net of federal benefit	27	55
Noncontrolling interest	(246)	(598)
Valuation allowance	(1,537)	(3,051)
Other	(109)	(289)
Total	$ 0	$ 0

XML

Stock-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Stock options	$ 90	$ 295
Restricted stock	169	112
Total	$ 259	$ 407

XML

Property, Plant and Equipment

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

3. Property, Plant and Equipment

Property, plant and equipment, stated at cost, consist of the following at March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013			December 31, 2012
Land and land improvements	$	19,643		$	19,643
Buildings and improvements		49,838			49,838
Machinery and equipment		250,082			250,042
Office furniture and equipment		6,493			6,493
Construction in progress		752			297
		326,808			326,313
Accumulated depreciation		(123,509	)		(116,668	)
Property, plant and equipment, net	$	203,299		$	209,645

Depreciation expense related to property, plant and equipment was $6,841,000 and $6,797,000 for the three months ended March 31, 2013 and 2012, respectively.

XML

Tax Increment Financing (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Remainder of 2013	$ 399
2014	431
2015	464
2016	501
2017	540
Thereafter	2,339
Total	$ 4,674

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Future minimum operating lease payments at March 31, 2013 are as follows (in thousands):

Remainder of 2013	$	8,578
2014		8,392
2015		6,972
2016		6,972
2017		6,972
Thereafter		5,197
Total	$	43,083

XML

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The U.S. statutory federal income tax rate is reconciled to the Company’s effective income tax rate as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Tax benefit at 35% federal statutory rate	$	1,865		$	3,883
State tax benefit, net of federal benefit		27			55
Noncontrolling interest		(246	)		(598	)
Valuation allowance		(1,537	)		(3,051	)
Other		(109	)		(289	)
	$	—		$	—

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The effects of temporary differences and other items that give rise to deferred tax assets and liabilities are presented below (in thousands):

	March 31, 2013			December 31, 2012
Deferred tax assets:
Capitalized start up costs	$	3,143		$	3,253
Stock-based compensation		965			965
Net operating loss carryover		86,256			84,960
Other		268			266
Deferred tax assets		90,632			89,444
Valuation allowance		(49,081	)		(47,544	)
Deferred tax liabilities:
Property, plant and equipment		(41,551	)		(41,900	)
Deferred tax liabilities		(41,551	)		(41,900	)
Net deferred tax asset	$	—		$	—

XML

Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Remainder of 2013	$ 8,578
2014	8,392
2015	6,972
2016	6,972
2017	6,972
Thereafter	5,197
Total	$ 43,083

XML

Tax Increment Financing (Details Textual) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Feb. 28, 2007
Proceeds From Tax Increment Revenue Noted Issued	$ 6
Debt Instrument, Interest Rate, Stated Percentage	7.85%

XML

Noncontrolling Interest (Tables)

3 Months Ended

Mar. 31, 2013

Noncontrolling Interest [Abstract]

Schedule Of Net Income Loss Attributable To Parent And Transfers From Noncontrolling Interest [Table Text Block]

The table below shows the effects of the changes in BioFuel Energy Corp.’s ownership interest in the LLC on the equity attributable to BioFuel Energy Corp.’s common stockholders for the three months ended March 31, 2012 and 2011 (in thousands):

Net Loss Attributable to BioFuel Energy Corp.’s Common Stockholders and

Transfers from the Noncontrolling Interest

	Three Months Ended March 31,
	2013			2012
Net loss attributable to BioFuel Energy Corp.	$	(4,635	)	$	(9,408	)
Increase in BioFuel Energy Corp. stockholders equity from issuance of common shares in exchange for Class B common shares and units of BioFuel Energy, LLC		—			—
Change in equity from net loss attributable to BioFuel Energy Corp. and transfers from noncontrolling interest	$	(4,635	)	$	(9,408	)

XML

Organization, Nature of Business, Basis of Presentation, Liquidity, and Going Concern Considerations (Details Textual) (USD $)	1 Months Ended	3 Months Ended		12 Months Ended
	Jun. 30, 2012	Mar. 31, 2013 gal	Mar. 31, 2012	Dec. 31, 2012	Jun. 15, 2012	Dec. 31, 2011	Mar. 31, 2013 Senior Debt Facility [Member]	Sep. 28, 2012 Senior Debt Facility [Member]	Mar. 31, 2013 Common Class B [Member]	Dec. 31, 2012 Common Class B [Member]	Jun. 15, 2012 Common Class B [Member]	Mar. 31, 2013 Subsidiaries [Member]	Dec. 31, 2012 Subsidiaries [Member]	Mar. 31, 2013 Cargill [Member]	Dec. 31, 2012 Cargill [Member]
Reverse Stock Split Outstanding Common Stock Ratio	one-for-twenty
Reverse Stock Split Authorized Common Stock Ratio	On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty.
Stockholders' Equity, Reverse Stock Split	The Company also split the number of authorized shares of common stock at a ratio of one-for-fourteen, thereby reducing the aggregate number of authorized common stock shares to 10,000,000, and also split the number of authorized shares of Class B common stock at a ratio of one-for-twenty, thereby reducing the aggregate number of authorized Class B common stock shares to 3,750,000. All share and per share information and all necessary par value adjustments have been retroactively restated in the financial statements to reflect the effect of this reverse stock split.
Debt of Subsidiary, Not Assumed		$ 8,300,000										$ 1,300,000
Percentage Of Owned Of Subsidiaries Membership Units		87.30%
Long-term Debt, Gross							170,500,000
Remaining Percentage Of Owned By Investment Funds Affiliates		12.70%
Common Stock, Shares Authorized		10,000,000		10,000,000	10,000,000				3,750,000	3,750,000	3,750,000
Common stock, shares outstanding		5,483,773		5,483,773					795,479	795,479
Total assets		249,024,000		250,423,000								258,100,000	259,700,000
Cash and cash equivalents		9,615,000	11,687,000	9,323,000		15,139,000
Accounts payable		13,785,000		11,638,000										10,600,000	9,000,000
Production, Barrels of Oil Equivalents		110,000,000
Total		173,401,000		173,429,000			12,900,000	3,600,000
Net loss		(5,328,000)	(11,093,000)	(46,322,000)
Operating Subsidiariespayment Terms		10.0 million contractual limit
Escrow Deposit		$ 938,000
Business Acquisition, Equity Interest Issued or Issuable, Description		the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. Summary of Significant Accounting Policies

Principles of Consolidation and Noncontrolling Interest

The accompanying consolidated financial statements include the Company, the LLC and its wholly-owned subsidiaries: BFE Holdings, LLC; BFE Operating Company, LLC; Buffalo Lake Energy, LLC; and Pioneer Trail Energy, LLC. All inter-company balances and transactions have been eliminated in consolidation. The Company treats all exchanges of LLC membership units for Company common stock as equity transactions, with any difference between the fair value of the Company’s common stock and the amount by which the noncontrolling interest is adjusted being recognized in equity.

Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures in the accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company sells its ethanol, distillers grain and corn oil products under the terms of marketing agreements. Revenue is recognized when risk of loss and title transfers upon shipment of ethanol, distillers grain or corn oil. In accordance with our marketing agreements, the Company records its revenues based on the amounts payable to us at the time of our sales of ethanol, distillers grain or corn oil. For our ethanol that is sold within the United States, the amount payable is equal to the average delivered price per gallon received by the marketing pool from Cargill’s customers, less average transportation and storage charges incurred by Cargill, and less a commission. We also sell a portion of our ethanol production to Cargill for export, which sales are shipped undenatured and are excluded from the marketing pool. For exported ethanol sales, the amount payable is equal to the contracted delivered price per gallon, less transportation and storage charges, and less a commission. The amount payable for distillers grain and corn oil is generally equal to the market price at the time of sale less a commission.

Cost of goods sold

Cost of goods sold primarily includes costs of materials (primarily corn, natural gas, chemicals and denaturant), electricity, purchasing and receiving costs, inspection costs, shipping costs, lease costs, plant management, certain compensation costs and general facility overhead charges, including depreciation expense.

General and administrative expenses

General and administrative expenses consist of salaries and benefits paid to our management and administrative employees, expenses relating to third party services, travel, office rent, marketing and other expenses, including certain expenses associated with being a public company, such as fees paid to our independent auditors associated with our annual audit and quarterly reviews, directors’ fees, and listing and transfer agent fees.

Cash and Cash Equivalents

Cash and cash equivalents include highly-liquid investments with an original maturity of three months or less. Cash equivalents are currently comprised of money market mutual funds. At March 31, 2013, we had $9.6 million held at three financial institutions, which is in excess of FDIC insurance limits.

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. The Company does not charge interest for any past due accounts receivable. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction to bad debt expense when received. As of March 31, 2013 and December 31, 2012, no allowance was considered necessary.

Concentrations of Credit Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk, whether on- or off-balance sheet, that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.

During the three months ended March 31, 2013 and 2012, the Operating Subsidiaries recorded sales to Cargill representing 73% and 78%, respectively, of total net sales. As of March 31, 2013 and December 31, 2012, the LLC, through its subsidiaries, had receivables from Cargill of $13.9 million and $7.5 million, respectively, representing 89% and 81% of total accounts receivable, respectively.

The Operating Subsidiaries purchase corn, its largest cost component in producing ethanol, from Cargill. During the three months ended March 31, 2013 and 2012, corn purchases from Cargill totaled $70.4 million and $111.8 million, respectively. As of March 31, 2013 and December 31, 2012, the LLC, through its subsidiaries, had payables to Cargill of $10.6 million and $9.0 million, respectively, related to corn purchases.

Inventories

Raw materials inventories, which consist primarily of corn, denaturant, supplies and chemicals, and work in process inventories are valued at the lower-of-cost-or-market, with cost determined on a first-in, first-out basis. Finished goods inventories consist of ethanol and distillers grain and are stated at lower of average cost or market.

A summary of inventories is as follows (in thousands):

	March 31, 2013		December 31, 2012
Raw materials	$	6,888	$	8,198
Work in process		3,239		2,831
Finished goods		1,913		2,414
	$	12,040	$	13,443

Derivative Instruments and Hedging Activities

Derivatives are recognized on the balance sheet at their fair value and are included in the accompanying balance sheets as “derivative financial instruments”. On the date the derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge). Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income, net of tax effect, until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable rate asset or liability are recorded in earnings). Changes in the fair value of undesignated derivative instruments or derivatives that do not qualify for hedge accounting are recognized in current period operations.

Accounting guidance for derivatives requires a company to evaluate contracts to determine whether the contracts are derivatives. Certain contracts that meet the definition of a derivative may be exempted as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. The Company’s contracts for corn and natural gas purchases and ethanol sales that meet these requirements and are designated as either normal purchase or normal sale contracts are exempted from the derivative accounting and reporting requirements.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. All costs related to purchasing and developing land or the engineering, design and construction of a plant are capitalized. Maintenance, repairs and minor replacements are charged to operating expenses while major replacements and improvements are capitalized. Depreciation is computed by the straight line method over the following estimated useful lives:

	Years
Land improvements	20 – 30
Buildings and improvements	7 – 40
Machinery and equipment:
Railroad equipment	20 – 39
Facility equipment	20 – 39
Other	5 – 7
Office furniture and equipment	3 – 10

Debt Issuance Costs

Debt issuance costs are stated at cost, less accumulated amortization. Debt issuance costs included in noncurrent assets at March 31, 2013 and December 31, 2012 represent costs incurred related to the Operating Subsidiaries Senior Debt Facility and tax increment financing agreements. These costs are being amortized, using an effective interest method, through interest expense over the term of the related debt. Estimated future debt issuance cost amortization as of March 31, 2013 is as follows (in thousands):

Remainder of 2013	$	729
2014		704
2015		8
2016		8
2017		8
Thereafter		33
Total	$	1,490

Impairment of Long-Lived Assets

The Company has two asset groups, its ethanol facility in Fairmont and its ethanol facility in Wood River, which are evaluated separately when considering whether the carrying value of these assets has been impaired. The Company continually monitors whether or not events or circumstances exist that would warrant impairment testing of its long-lived assets. In evaluating whether impairment testing should be performed, the Company considers several factors including the carrying value of the long-lived assets, projected production volumes at its facilities, projected ethanol and distillers grain prices that we expect to receive, and projected corn and natural gas costs we expect to incur. In the ethanol industry, operating margins, and consequently undiscounted future cash flows, are primarily driven by the crush spread. In the event that the crush spread is sufficiently depressed to result in negative operating cash flow at its facilities for an extended time period, the Company will evaluate whether an impairment of its long-lived assets may have occurred.

Recoverability is measured by comparing the carrying value of an asset with estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved, quoted market prices or appraised values, depending on the nature of the assets. As of March 31, 2013, the Company performed an impairment evaluation of the recoverability of its long-lived assets due to marginal crush spreads. As a result of the impairment evaluation, it was determined that the future cash flows from the assets exceeded the carrying values, and therefore no further analysis was necessary and no impairment was recorded.

Stock-Based Compensation

Expense associated with stock-based awards and other forms of equity compensation is based on fair value at grant and recognized on a straight line basis in the financial statements over the requisite service period for those awards that are expected to vest.

Asset Retirement Obligations

Asset retirement obligations are recognized when a contractual or legal obligation exists and a reasonable estimate of the amount can be made. Changes to the asset retirement obligation resulting from revisions to the timing or the amount of the original undiscounted cash flow estimates shall be recognized as an increase or decrease to both the carrying amount of the asset retirement obligation and the related asset retirement cost capitalized as part of the related property, plant and equipment. At March 31, 2013, the Operating Subsidiaries had accrued asset retirement obligation liabilities of $151,000 and $190,000 for its plants at Wood River and Fairmont, respectively. At December 31, 2012, the Operating Subsidiaries had accrued asset retirement obligation liabilities of $149,000 and $188,000 for its plants at Wood River and Fairmont, respectively.

The asset retirement obligations accrued for Wood River relate to the obligations in our contracts with Cargill and Union Pacific Railroad (“Union Pacific”). According to the grain elevator lease with Cargill, the equipment that is adjacent to the grain elevator may be required at Cargill’s discretion to be removed at the end of the lease. In addition, according to the contract with Union Pacific, the buildings that are built near their land in Wood River may be required at Union Pacific’s request to be removed at the end of our contract with them. The asset retirement obligations accrued for Fairmont relate to the obligations in our contracts with Cargill and in our water permit issued by the state of Minnesota. According to the grain elevator lease with Cargill, the equipment that is adjacent to the grain elevator being leased may be required at Cargill’s discretion to be removed at the end of the lease. In addition, the water permit in Fairmont requires that we secure all above ground storage tanks whenever we discontinue the use of our equipment for an extended period of time in Fairmont. The estimated costs of these obligations have been accrued at the current net present value of these obligations at the end of an estimated 20 year life for each of the plants. These liabilities have corresponding assets recorded in property, plant and equipment, which are being depreciated over 20 years.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company regularly reviews historical and anticipated future pre-tax results of operations to determine whether the Company will be able to realize the benefit of its deferred tax assets. A valuation allowance is required to reduce the potential deferred tax asset when it is more likely than not that all or some portion of the potential deferred tax asset will not be realized due to the lack of sufficient taxable income. The Company establishes reserves for uncertain tax positions that reflect its best estimate of deductions and credits that may not be sustained on a more likely than not basis. As the Company has incurred tax losses since its inception and expects to continue to incur tax losses for the foreseeable future, we will continue to provide a valuation allowance against deferred tax assets until the Company believes that such assets will be realized. The Company includes interest on tax deficiencies and income tax penalties in the provision for income taxes.

Fair Value of Financial Instruments

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. Any derivative financial instruments are carried at fair value. The fair value of the Company’s capital lease and notes payable are not materially different from their carrying amounts based on anticipated interest rates that management believes would currently be available to the Company for similar issues of debt, taking into account the current credit risk of the Company and other market factors. The fair value of the Operating Subsidiaries senior debt, based on an anticipated interest rate of 12%, is estimated to be approximately $155.3 million.

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance. Each of our plants is considered its own unique operating segment under these criteria. However, when two or more operating segments have similar economic characteristics, accounting guidance allows for them to be aggregated into a single operating segment for purposes of financial reporting. Our two plants are very similar in all characteristics and accordingly, the Company presents a single reportable segment, the manufacture of fuel-grade ethanol and the co-products of the ethanol production process.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

XML

Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Raw materials	$ 6,888	$ 8,198
Work in process	3,239	2,831
Finished goods	1,913	2,414
Inventory, Net, Total	$ 12,040	$ 13,443

XML

Long-Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Term loans	$ 170,480	$ 170,480
Capital lease	2,472	2,475
Notes payable	449	474
Total	173,401	173,429
Less current portion	(170,635)	(170,634)
Long-term portion	$ 2,766	$ 2,795

XML

Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Capitalized start up costs	$ 3,143	$ 3,253
Stock-based compensation	965	965
Net operating loss carryover	86,256	84,960
Other	268	266
Deferred tax assets	90,632	89,444
Valuation allowance	(49,081)	(47,544)
Deferred tax liabilities:
Property, plant and equipment	(41,551)	(41,900)
Deferred tax liabilities	(41,551)	(41,900)
Net deferred tax asset	$ 0	$ 0

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Assets
Cash and cash equivalents	$ 9,615	$ 9,323
Accounts receivable	15,546	9,256
Inventories	12,040	13,443
Deposits	3,074	3,074
Prepaid expenses	954	882
Other current assets	23	78
Total current assets	41,252	36,056
Property, plant and equipment, net	203,299	209,645
Debt issuance costs, net	1,490	1,739
Other assets	2,983	2,983
Total assets	249,024	250,423
Liabilities and equity
Accounts payable	13,785	11,638
Current portion of long-term debt	170,635	170,634
Current portion of tax increment financing	399	399
Other current liabilities	4,117	2,500
Total current liabilities	188,936	185,171
Long-term debt, net of current portion	2,766	2,795
Tax increment financing, net of current portion	4,275	4,275
Other non-current liabilities	3,006	3,072
Total liabilities	198,983	195,313
Commitments and contingencies
Equity
Preferred stock, $0.01 par value; 5,000,000 shares authorized and no shares outstanding at March 31, 2013 and December 31, 2012	0	0
Common Stock Value	54	54
Less common stock held in treasury, at cost, 40,481 shares at March 31, 2013 and December 31, 2012	(4,316)	(4,316)
Additional paid-in capital	189,863	189,604
Accumulated deficit	(133,755)	(129,120)
Total BioFuel Energy Corp. stockholders' equity	51,854	56,230
Noncontrolling interest	(1,813)	(1,120)
Total equity	50,041	55,110
Total liabilities and equity	249,024	250,423
Common Class B [Member]
Equity
Common Stock Value	$ 8	$ 8

XML

Stockholders' Equity (Details Textual) (USD $)	1 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2012	Mar. 31, 2013	Dec. 31, 2007	Dec. 31, 2012
Reverse Stock Split Outstanding Common Stock Ratio	one-for-twenty
Reverse Stock Split Authorized Common Stock Ratio	On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty.
Stockholders' Equity, Reverse Stock Split	The Company also split the number of authorized shares of common stock at a ratio of one-for-fourteen, thereby reducing the aggregate number of authorized common stock shares to 10,000,000, and also split the number of authorized shares of Class B common stock at a ratio of one-for-twenty, thereby reducing the aggregate number of authorized Class B common stock shares to 3,750,000. All share and per share information and all necessary par value adjustments have been retroactively restated in the financial statements to reflect the effect of this reverse stock split.
Treasury shares		40,481		40,481
Treasury Stock Acquired, Average Cost Per Share		$ 106.62
Amount Available Under Stock Repurchase Plan		$ 3,184,000	$ 7,500,000

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities
Net loss	$ (5,328)	$ (11,093)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation expense	259	407
Depreciation and amortization	7,090	7,058
Changes in operating assets and liabilities:
Accounts receivable	(6,290)	(4,740)
Inventories	1,403	7,279
Prepaid expenses	(72)	223
Accounts payable	2,151	1,855
Other current liabilities	1,617	(785)
Other assets and liabilities	(11)	126
Net cash provided by operating activities	819	330
Cash flows from investing activities
Purchases of property, plant and equipment	(499)	(581)
Net cash used in investing activities	(499)	(581)
Cash flows from financing activities
Repayment of debt	0	(3,150)
Repayment of notes payable and capital leases	(28)	(51)
Net cash used in financing activities	(28)	(3,201)
Net increase (decrease) in cash and cash equivalents	292	(3,452)
Cash and cash equivalents, beginning of period	9,323	15,139
Cash and cash equivalents, end of period	9,615	11,687
Cash paid for interest	104	1,565
Non-cash investing and financing activities:
Additions to property, plant and equipment unpaid during period	$ 0	$ 48

XML

Noncontrolling Interest (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2007
Initial Public Offering Price Per Share		$ 210
Equity Method Investment, Ownership Percentage	28.90%
Percentage Of Owned Of Subsidiaries Membership Units	87.30%
Percentage Of Payment To Exchanging Llc Member In Cash Savings Under Tax Benefit Sharing Agreement	85.00%
Remaining Percentage Of Payment To Exchanging Llc Member In Cash Savings Under Tax Benefit Sharing Agreement	15.00%
Greenlight [Member]
Membership Units To Be Issued	69,382
Thirdpoint [Member]
Membership Units To Be Issued	34,691
Common Class B [Member]
Membership Units To Be Issued	897,903

XML

Summary of Significant Accounting Policies (Details Textual) (USD $)	3 Months Ended								3 Months Ended			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2013 Wood River Plant [Member]	Dec. 31, 2012 Wood River Plant [Member]	Mar. 31, 2013 Fairmont Plant [Member]	Dec. 31, 2012 Fairmont Plant [Member]	Mar. 31, 2013 Cargill [Member]	Mar. 31, 2012 Cargill [Member]	Dec. 31, 2012 Cargill [Member]	Mar. 31, 2013 Sales Revenue, Goods, Net [Member]	Mar. 31, 2012 Sales Revenue, Goods, Net [Member]	Mar. 31, 2013 Accounts Receivable [Member]	Mar. 31, 2012 Accounts Receivable [Member]
Cash and cash equivalents	$ 9,615,000	$ 9,323,000	$ 11,687,000	$ 15,139,000
Concentration Risk Percentage During Period												73.00%	78.00%	89.00%	81.00%
Accounts receivable	15,546,000	9,256,000							13,900,000		7,500,000
Cost of Purchased Oil and Gas									70,400,000	111,800,000
Accounts payable	13,785,000	11,638,000							10,600,000		9,000,000
Asset Retirement Obligation					151,000	149,000	190,000	188,000
Property, Plant and Equipment, Estimated Useful Lives	20 Years
Longterm Debt Anticipated Interest Rate	12.00%
Long-term Debt, Fair Value	$ 155,300,000

XML

Property, Plant and Equipment (Tables)

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Property, plant and equipment, stated at cost, consist of the following at March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013			December 31, 2012
Land and land improvements	$	19,643		$	19,643
Buildings and improvements		49,838			49,838
Machinery and equipment		250,082			250,042
Office furniture and equipment		6,493			6,493
Construction in progress		752			297
		326,808			326,313
Accumulated depreciation		(123,509	)		(116,668	)
Property, plant and equipment, net	$	203,299		$	209,645

XML

Property, Plant and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Land and land improvements	$ 19,643	$ 19,643
Buildings and improvements	49,838	49,838
Machinery and equipment	250,082	250,042
Office furniture and equipment	6,493	6,493
Construction in progress	752	297
Property, Plant and Equipment, Gross	326,808	326,313
Accumulated depreciation	(123,509)	(116,668)
Property, plant and equipment, net	$ 203,299	$ 209,645

XML

Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Schedule Of Long Term Debt [Table Text Block]

The following table summarizes long-term debt as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013			December 31, 2012
Term loans	$	170,480		$	170,480
Capital lease		2,472			2,475
Notes payable		449			474
		173,401			173,429
Less current portion		(170,635	)		(170,634	)
Long-term portion	$	2,766		$	2,795

Schedule Of Maturities Of Long Term Debt [Table Text Block]

The following table summarizes the aggregate maturities of our long-term debt as of March 31, 2013 (in thousands):

Remainder of 2013	$	170,606
2014		146
2015		57
2016		60
2017		66
Thereafter		2,466
Total	$	173,401

XML

Organization, Nature of Business, Basis of Presentation, Liquidity, and Going Concern Considerations

3 Months Ended

Mar. 31, 2013

Organization, Nature Of Business, and Liquidity Considerations [Abstract]

Organization Nature Of Business And Liquidity Considerations [Text Block]

1. Organization, Nature of Business, Basis of Presentation, Liquidity, and Going Concern Considerations

Organization and Nature of Business

BioFuel Energy Corp. (“we” or “the Company”) produces and sells ethanol and its related co-products, primarily distillers grain and corn oil. We have historically operated our two dry-mill ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota. Each of these plants has an undenatured nameplate production capacity of approximately 110 million gallons per year (“Mmgy”). Our operations are subject to changes in commodity prices, specifically, the price of our main commodity input, corn, relative to the price of our main commodity product, ethanol, which is known in the industry as the “crush spread”. Drought conditions in the American Midwest significantly impacted the 2012 corn crop and caused a significant reduction in the corn yield. This led to an increase in the price of corn and a corresponding narrowing in the crush spread as ethanol prices did not rise sufficiently with rising corn prices, due to an oversupply of ethanol. As a result, in September 2012 the Company decided to idle its Fairmont facility and in February 2013 we reduced staffing at the Fairmont facility. Although crush spreads have improved during the first quarter of 2013, our Fairmont plant remains idle. However, we continue to evaluate the economic viability of restarting our Fairmont facility, including the working capital that would be required to restart.

We were incorporated as a Delaware corporation on April 11, 2006 to invest solely in BioFuel Energy, LLC (the “LLC”), a limited liability company organized on January 25, 2006 to build and operate ethanol production facilities in the Midwestern United States. The Company’s headquarters are located in Denver, Colorado. We are a holding company with no operations of our own, and are the sole managing member of the LLC, which is itself a holding company and indirectly owns all of our operating assets. As the sole managing member of the LLC, the Company operates and controls all of the business and affairs of the LLC and its subsidiaries. The Company’s ethanol plants are owned and operated by the operating subsidiaries of the LLC (the “Operating Subsidiaries”). Those Operating Subsidiaries are party to a Credit Agreement (the “Senior Debt Facility”) with a group of lenders, for which First National Bank of Omaha acts as Administrative Agent, and substantially all of the assets of the Operating Subsidiaries are pledged as collateral under the Senior Debt Facility. Neither the Company nor the LLC is a party, either as borrower or guarantor, under the Senior Debt Facility, and none of their respective assets, other than the LLC interests in the Operating Subsidiaries themselves, are pledged as collateral under the Senior Debt Facility. The aggregate book value of the assets of the LLC at March 31, 2013 and December 31, 2012 was $258.1 million and $259.7 million, respectively.

 We work closely with Cargill, one of the world’s leading agribusiness companies, with whom we have an extensive commercial relationship. At each of our plant locations, Cargill has a local grain origination presence and owns adjacent grain storage and handling facilities, which we lease from them. Cargill provides corn procurement services, markets the ethanol we produce and provides transportation logistics for our two plants under long-term contracts.

On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty. The Company also split the number of authorized shares of common stock at a ratio of one-for-fourteen, thereby reducing the aggregate number of authorized common stock shares to 10,000,000, and also split the number of authorized shares of Class B common stock at a ratio of one-for-twenty, thereby reducing the aggregate number of authorized Class B common stock shares to 3,750,000. All share and per share information and all necessary par value equity adjustments have been retroactively restated in the financial statements to reflect the effect of this reverse stock split.

At March 31, 2013, the Company owned 87.3% of the LLC membership units with the remaining 12.7% owned by an individual and by certain investment funds affiliated with one of the original equity investors of the LLC. The Class B common shares of the Company are held by the same individual and investment funds who held 795,479 membership units in the LLC as of March 31, 2013 that, together with the corresponding Class B shares, can be exchanged for newly issued shares of common stock of the Company on a one-for-one basis. The proportionate value of the LLC membership units held by the individual or investment funds other than the Company are recorded as noncontrolling interest on the consolidated balance sheets. Holders of shares of Class B common stock have no economic rights but are entitled to one vote for each share held. Shares of Class B common stock are retired upon exchange of the related membership units in the LLC. 

Basis of Presentation, Liquidity, and Going Concern Considerations

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern. Our financial results and cash flows are subject to wide and unpredictable fluctuations in the crush spread. The price of our main co-product, distillers grain, is likewise subject to wide, unpredictable fluctuations, typically in conjunction with changes in the price of corn. The prices of these commodities are volatile and beyond our control. As a result of the volatility of the prices for these and other items, our results fluctuate substantially and in ways that are largely beyond our control. As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $5.3 million during the three months ended March 31, 2013.

Narrow commodity margins present a significant risk to our cash flows and liquidity. We have had, and continue to have, limited liquidity, with $9.6 million of cash and cash equivalents as of March 31, 2013, of which $8.3 million was held at the LLC and $1.3 million was held at the Operating Subsidiaries, which is subject to the lenders’ liens under the Senior Debt Facility. The Operating Subsidiaries have also relied upon extensions of payment terms by Cargill as an additional source of liquidity and working capital. As of March 31, 2013 the Operating Subsidiaries owed Cargill $10.6 million for accounts payable related to corn purchases. Pursuant to an arrangement with Cargill, the Operating Subsidiaries have been permitted to extend corn payment terms beyond the $10.0 million contractual limit so long as the amounts Cargill owes the Operating Subsidiaries for ethanol exceed the accounts payable balance by an amount that is satisfactory to Cargill. This arrangement may be terminated at any time on little or no notice, in which case the Operating Subsidiaries would need to use cash on hand or other sources of liquidity, if available, to fund their operations.

Due to our limited and declining liquidity, our Board of Directors determined that, in order to preserve cash at the LLC, the Operating Subsidiaries would not make the regularly-scheduled payments of principal and interest that were due under the outstanding Senior Debt Facility on September 28, 2012, in an aggregate amount of $3.6 million. As a result, the Operating Subsidiaries received a Notice of Default from First National Bank of Omaha, as Administrative Agent for the lenders under the Senior Debt Facility. Since the initial default, the Operating Subsidiaries have not made any of the regularly-scheduled principal and interest payments, which through March 31, 2013 totaled $12.9 million.

 On April 11, 2013, the Operating Subsidiaries entered into a definitive agreement (the “Lender Agreement”) with First National Bank of Omaha, as Escrow Agent under the Lender Agreement, and as Administrative Agent and Collateral Agent for the lenders under the Senior Debt Facility. Under the terms of the Lender Agreement, the Administrative Agent and the lenders have agreed to provide the Operating Subsidiaries with a grace period until July 30, 2013 to allow the Company to pursue one or more strategic alternatives, including but not limited to a potential sale of one or both of the Company’s ethanol plants. This grace period is subject to the achievement of certain milestones, and may be extended at the sole discretion of the Administrative Agent. The Company has engaged Piper Jaffray & Co. to act as its financial advisor to assist us in exploring these strategic alternatives. In the event of a sale of one or both of our ethanol plants, the proceeds of such sale would first be applied to repay all or a portion of the outstanding indebtedness under the Senior Debt Facility. Residual proceeds after satisfying the senior indebtedness, if any, would accrue to the Company. Any such sale would also most likely require the consent of the lenders under the Senior Debt Facility.

Simultaneously with the execution of the Lender Agreement, the Operating Subsidiaries, the Administrative Agent and the lenders under the Senior Debt Facility also entered into a Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions (the “Deed in Lieu Agreement”), pursuant to which, among other things, the Operating Subsidiaries have agreed to transfer ownership of their respective ethanol plants, including the underlying real property, personal property and all material contracts used to operate the plants, to certain designees of the Administrative Agent and the lenders (“Newco”), in full satisfaction of all outstanding obligations under the Senior Debt Facility and in lieu of the Administrative Agent and the lenders exercising their rights and remedies under the Senior Debt Facility. The Company has made a contingent payment into escrow of $938,000 for the anticipated payment of certain obligations and liabilities of the Operating Subsidiaries which are to be paid or assumed by Newco in conjunction with any such transfer. In conjunction with any such transfer, the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

Under the terms of the Lender Agreement, the Deed in Lieu Agreement is to be held in escrow by the Escrow Agent until the earlier of such time as the Company and its Operating Subsidiaries have completed their pursuit of the strategic alternatives described above or July 30, 2013, unless otherwise extended by the Administrative Agent.

Although the Company intends to diligently explore and pursue any number of strategic alternatives, we cannot assure you that it will be able to do so on terms acceptable to the Company or to the lenders under the Senior Debt Facility, if at all. In addition, in either the case of a transfer of the assets of the Operating Subsidiaries to the lenders under the Senior Debt Facility or a sale of one or both of our plants, as discussed above, we cannot assure you as to what value, if any, may be derived for shareholders of the Company from such transfer or sale.

As of March 31, 2013, the Operating Subsidiaries had $170.5 million of principal indebtedness outstanding under the Senior Debt Facility. The entire amount outstanding under the Senior Debt Facility has been classified as a current liability in the March 31, 2013 consolidated balance sheet.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the default of our Operating Subsidiaries under the Senior Debt Facility, the cessation of operations at the Fairmont ethanol facility, and our limited liquidity all raise substantial doubt about the Company’s ability to do so. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

XML

Consolidated Balance Sheets [Parenthetical] (USD $)	Mar. 31, 2013	Dec. 31, 2012
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares outstanding	5,483,773	5,483,773
Treasury shares	40,481	40,481
Common Class B [Member]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	3,750,000	3,750,000
Common stock, shares outstanding	795,479	795,479

XML

Employee Benefit Plans

3 Months Ended

Mar. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

11. Employee Benefit Plans

The LLC sponsors a 401(k) profit sharing and savings plan for its employees. Employee participation in this plan is voluntary and the LLC matches 50% of eligible employee contributions, up to an amount equal to 3% of employee compensation, on a biweekly basis. For the three months ended March 31, 2013 and 2012, contributions to the plan by the LLC totaled $47,000 and $83,000, respectively.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 07, 2013
Entity Registrant Name	BioFuel Energy Corp.
Entity Central Index Key	0001373670
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	biof
Entity Common Stock, Shares Outstanding		5,443,292
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

12. Commitments and Contingencies

The Operating Subsidiaries entered into two operating lease agreements with Cargill. Cargill’s grain handling and storage facilities, located adjacent to the Wood River and Fairmont plants, are being leased for 20 years, which began in September 2008 for both plants. Minimum annual payments initially were $800,000 for the Fairmont plant and $1,000,000 for the Wood River plant so long as the associated corn supply agreements with Cargill remain in effect. Should the Operating Subsidiaries not maintain its corn supply agreements with Cargill, the minimum annual payments under each lease increase to $1,200,000 and $1,500,000, respectively. The leases contain escalation clauses that are based on the percentage change in the Midwest Consumer Price Index. The escalation clauses are considered to be contingent rent and, accordingly, are not included in minimum lease payments. Rent expense is recognized on a straight line basis over the terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations and insolvency. Effective September 1, 2009, the Operating Subsidiaries and Cargill entered into Omnibus Agreements whereby the two operating lease agreements were modified, for a period of one year, to defer a portion of the monthly lease payments. The deferred lease payments were to be paid back to Cargill over a two year period beginning September 1, 2010. On September 23, 2010, the Operating Subsidiaries and Cargill entered into a letter agreement (“Letter Agreement”) whereby (i) effective October 2010 the minimum annual payments under the leases were reduced to $50,000 for the Fairmont plant and $250,000 for the Wood River plant and (ii) repayment of the deferred lease payments have been deferred for an indefinite period of time. As of March 31, 2013, the deferred lease payments totaled $1.6 million and are included in other non-current liabilities.

Beginning in the second quarter of 2008, the Operating Subsidiaries entered into agreements to lease railroad cars over a period of ten years. Pursuant to these lease agreements, the Operating Subsidiaries are currently leasing 785 railroad cars for approximately $6.7 million per year. Monthly rental charges escalate if modifications of the cars are required by governmental authorities or mileage exceeds 30,000 miles in any calendar year. Rent expense is recognized on a straight line basis over the terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations.

In April 2008, the LLC entered into a five year lease that began July 1, 2008 for office space for its corporate headquarters. Rent expense is being recognized on a straight line basis over the term of the lease.

In October 2011, the Operating Subsidiaries entered into two operating lease agreements to lease corn oil extraction systems, one for each of its plants. Each lease agreement is for a period of two years and commenced in April 2012 when funding was completed. Pursuant to these lease agreements, the Operating Subsidiaries are paying approximately $4.3 million per year for the corn oil extraction systems. Rent expense is recognized on a straight line basis over the terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations under either lease, as well as any payment default under any of the Company’s other material debt obligations, including the Senior Debt Facility. The Company has informed Farnam Street Financial, Inc. (“Farnam”) of the default notice it received from its senior lenders, and Farnam has elected not to declare a default under either lease agreement so long as the Operating Subsidiaries continue to make timely lease payments.` 

Future minimum operating lease payments at March 31, 2013 are as follows (in thousands):

Remainder of 2013	$	8,578
2014		8,392
2015		6,972
2016		6,972
2017		6,972
Thereafter		5,197
Total	$	43,083

Rent expense recorded for the three months ended March 31, 2013 and 2012 totaled $2,861,000 and $2,822,000, respectively.

Pursuant to long-term agreements, Cargill is the exclusive supplier of corn to the Wood River and Fairmont plants for twenty years commencing September 2008. The price of corn purchased under these agreements is based on a formula including cost plus an origination fee of $0.048 per bushel. The minimum annual origination fee payable to Cargill per plant under the agreements is $1.2 million. The agreements contain events of default that include failure to pay, willful misconduct, purchase of corn from another supplier, insolvency or the termination of the associated grain facility lease. Effective September 1, 2009, the Operating Subsidiaries and Cargill entered into Omnibus Agreements whereby the two corn supply agreements were modified, for a period of one year, extending payment terms for our corn purchases which were to revert to the original terms on September 1, 2010. On September 23, 2010, the Operating Subsidiaries and Cargill entered into a Letter Agreement whereby the extended payment terms for our corn purchases will remain in effect for the remainder of the two corn supply agreements.

At March 31, 2013, the Operating Subsidiaries had contracted to purchase 63,000 bushels of corn to be delivered between April 2013 and October 2013 at our Fairmont location, and 7,367,000 bushels of corn to be delivered between April 2013 and May 2014 at our Wood River location. The purchase commitment for the Wood River location represents 18% of the projected corn requirements during that period. The purchase price of the corn will be determined at the time of delivery.

Cargill has agreed to purchase all ethanol produced at the Wood River and Fairmont plants through September 2016. Under the terms of the ethanol marketing agreements, the Wood River and Fairmont plants generally participate in a marketing pool in which all parties receive the same net price. That price is generally the average delivered price per gallon received by the marketing pool less average transportation and storage charges and less a commission. In certain circumstances, the plants may elect not to participate in the marketing pool. Minimum annual commissions are payable to Cargill equal to 1% of Cargill’s average selling price for 82.5 million gallons of ethanol from each plant. The ethanol marketing agreements contain events of default that include failure to pay, willful misconduct and insolvency. Effective September 1, 2009, the subsidiaries and Cargill entered into Omnibus Agreements whereby the two ethanol marketing agreements were modified, for a period of one year, to defer a portion of the monthly ethanol commission payments. The deferred commission payments were to be paid to Cargill over a two year period beginning September 1, 2010. On September 23, 2010, the subsidiaries and Cargill entered into a Letter Agreement whereby (i) effective September 24, 2010 the ethanol commissions were reduced and (ii) repayment of the deferred commission payments have been deferred for an indefinite period of time with any repayment at the discretion of the Operating Subsidiaries. As of March 31, 2013, the deferred ethanol commissions totaled $1.0 million and are included in other non-current liabilities.

The Company is not currently a party to any material legal, administrative or regulatory proceedings that have arisen in the ordinary course of business or otherwise that would result in loss contingencies.

XML

Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net sales	$ 89,041	$ 139,413
Cost of goods sold	90,912	145,933
Gross loss	(1,871)	(6,520)
General and administrative expenses:
Compensation expense	1,310	1,804
Other	1,721	931
Operating loss	(4,902)	(9,255)
Other income (expense):
Other income	1,459	0
Interest expense	(1,885)	(1,838)
Loss before income taxes	(5,328)	(11,093)
Income tax provision (benefit)	0	0
Net loss	(5,328)	(11,093)
Less: Net loss attributable to the noncontrolling interest	693	1,685
Net loss attributable to BioFuel Energy Corp. common stockholders	$ (4,635)	$ (9,408)
Loss per share - basic and diluted attributable to BioFuel Energy Corp. common stockholders (in dollars per share)	$ (0.87)	$ (1.83)
Weighted average shares outstanding - basic and diluted (in shares)	5,308	5,140

XML

Tax Increment Financing

3 Months Ended

Mar. 31, 2013

Tax Increment Financing [Abstract]

Tax Increment Financing [Text Block]

6. Tax Increment Financing

In February 2007, the operating subsidiary that constructed the Wood River plant received $6.0 million from the proceeds of a tax increment revenue note issued by the City of Wood River, Nebraska. The proceeds funded improvements to property owned by the operating subsidiary. The City of Wood River will pay the principal and interest of the note from the incremental increase in the property taxes related to the improvements made to the property. The interest rate on the note is 7.85%. The proceeds have been recorded as a liability which is reduced as the operating subsidiary remits property taxes to the City of Wood River, which began in 2008 and will continue through 2021. The LLC has guaranteed the principal and interest of the tax increment revenue note if, for any reason, the City of Wood River fails to make the required payments to the holder of the note or the operating subsidiary fails to make the required payments to the City of Wood River.

The following table summarizes the aggregate maturities of the tax increment financing debt as of March 31, 2013 (in thousands):

Remainder of 2013	$	399
2014		431
2015		464
2016		501
2017		540
Thereafter		2,339
Total	$	4,674

XML

Long-Term Debt

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

Long Term Debt Excluding Tax Increment Financing [Text Block]

5. Long-Term Debt

The following table summarizes long-term debt as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013			December 31, 2012
Term loans	$	170,480		$	170,480
Capital lease		2,472			2,475
Notes payable		449			474
		173,401			173,429
Less current portion		(170,635	)		(170,634	)
Long-term portion	$	2,766		$	2,795

Senior Debt Facility

 In September 2006, the Operating Subsidiaries entered into the Senior Debt Facility to finance the construction of and provide working capital to operate our ethanol plants. Neither the Company nor the LLC is a borrower or a guarantor under the Senior Debt Facility, although the equity interests and assets of our subsidiaries are pledged as collateral to secure the debt under the facility. Principal payments under the Senior Debt Facility are payable quarterly at a minimum amount of $3,150,000, with additional pre-payments to be made out of available cash flow. These term loans mature in September 2014.

The Operating Subsidiaries did not make the regularly-scheduled payments of principal and interest that were due under the outstanding Senior Debt Facility on September 28, 2012, in an aggregate amount of $3.6 million. As a result, the Operating Subsidiaries received a Notice of Default from First National Bank of Omaha, as Administrative Agent for the lenders under the Senior Debt Facility. Since the initial default the Operating Subsidiaries have not made any of the regularly-scheduled principal and interest payments, which through March 31, 2013 totaled $12.9 million.

On April 11, 2013, the Operating Subsidiaries entered into a Lender Agreement with First National Bank of Omaha, as Escrow Agent under the Lender Agreement, and as Administrative Agent and Collateral Agent for the lenders under the Senior Debt Facility. Under the terms of the Lender Agreement, the Administrative Agent and the lenders have agreed to provide the Operating Subsidiaries with a grace period until July 30, 2013 to allow the Company to pursue one or more strategic alternatives, including but not limited to a potential sale of one or both of the Company’s ethanol plants. This grace period is subject to the achievement of certain milestones, and may be extended at the sole discretion of the Administrative Agent. The Company has engaged Piper Jaffray & Co. to act as its financial advisor to assist us in exploring these strategic alternatives.

Simultaneously with the execution of the Lender Agreement, the Operating Subsidiaries, the Administrative Agent and the lenders under the Senior Debt Facility also entered into a Deed in Lieu Agreement, pursuant to which, among other things, the Operating Subsidiaries have agreed to transfer ownership of their respective ethanol plants, including the underlying real property, personal property and all material contracts used to operate the plants, to Newco, in full satisfaction of all outstanding obligations under the Senior Debt Facility and in lieu of the Administrative Agent and the lenders exercising their rights and remedies under the Senior Debt Facility. The Company has made a contingent payment into escrow of $938,000 for the anticipated payment of certain obligations and liabilities of the Operating Subsidiaries which are to be paid or assumed by Newco in conjunction with any such transfer. In conjunction with any such transfer, the Company would receive a full and final release of all known or potential claims of the lenders, as well as a 1% equity interest in Newco, which may be increased, under certain circumstances, to a 2% equity interest in Newco along with, in such circumstances, the right to acquire up to an additional 17.5% of the equity of Newco.

Under the terms of the Lender Agreement, the Deed in Lieu Agreement is to be held in escrow by the Escrow Agent until the earlier of such time as the Company and its Operating Subsidiaries have completed their pursuit of the strategic alternatives described above or July 30, 2013, unless otherwise extended by the Administrative Agent.

As of March 31, 2013, the Operating Subsidiaries had $170.5 million of principal indebtedness outstanding under the Senior Debt Facility. The entire amount outstanding under the Senior Debt Facility has been classified as a current liability in the March 31, 2013 consolidated balance sheet.

Interest rates on the Senior Debt Facility are, at management’s option, set at: i) a base rate, which is the higher of the federal funds rate plus 0.5% or the administrative agent’s prime rate, in each case plus a margin of 2.0%; or ii) at LIBOR plus 3.0%. Interest on base rate loans is payable quarterly and, depending on the LIBOR rate elected, as frequently as monthly on LIBOR loans, but no less frequently than quarterly. In addition, since the Operating Subsidiaries defaulted on their payments of principal and interest in September 2012, those unpaid balances have accrued interest at a penalty rate of 8.3%. The interest rate in effect on the borrowings at both March 31, 2013 and December 31, 2012 was 3.2%.

The Senior Debt Facility is secured by a first priority lien on all right, title and interest in and to the Wood River and Fairmont plants and any accounts receivable or property associated with those plants and a pledge of all of our equity interests in the Operating Subsidiaries. The Operating Subsidiaries have established collateral deposit accounts maintained by an agent of the banks, into which their revenues are deposited, subject to security interests to secure any outstanding obligations under the Senior Debt Facility. These funds are then allocated into various sweep accounts held by the collateral agent, including accounts that provide funds for the operating expenses of the Operating Subsidiaries. The collateral accounts have various provisions, including historical and prospective debt service coverage ratios and debt service reserve requirements, which determine whether there is, and the amount of, cash available to the LLC from the collateral accounts each month. The terms of the Senior Debt Facility also include covenants that impose certain limitations on, among other things, the ability of the Operating Subsidiaries to incur additional debt, grant liens or encumbrances, declare or pay dividends or distributions, conduct asset sales or other dispositions, merge or consolidate, and conduct transactions with affiliates. The terms of the Senior Debt Facility also include customary events of default including failure to meet payment obligations, failure to pay financial obligations when due, failure of the Operating Subsidiaries to remain solvent and failure to obtain or maintain required governmental approvals. Under the terms of separate management services agreements between our Operating Subsidiaries and the LLC, the Operating Subsidiaries were paying a monthly management fee of $884,000 to the LLC to cover salaries, rent, and other operating expenses of the LLC. Due to the Senior Debt Facility payment default, the lenders required the Operating Subsidiaries to reduce their monthly management fee to $260,000 per month effective October 2012.

Debt issuance fees and expenses of $7.9 million ($1.4 million, net of accumulated amortization as of March 31, 2013) have been incurred in connection with the Senior Debt Facility. These costs have been deferred and are being amortized and expensed as interest over the term of the Senior Debt Facility. 

Capital Lease

The operating subsidiary that constructed the Fairmont plant, has entered into an agreement with the local utility pursuant to which the utility has built and owns and operates a substation and distribution facility in order to supply electricity to the plant. The operating subsidiary is paying a fixed facilities charge based on the cost of the substation and distribution facility of $34,000 per month, over the 30-year term of the agreement. This fixed facilities charge is being accounted for as a capital lease in the accompanying financial statements. The agreement also includes a $25,000 monthly minimum energy charge that also began in the first quarter of 2008.

Notes Payable

Notes payable relate to certain financing agreements in place at our Wood River facility. The operating subsidiary entered into a note payable for $419,000 with the City of Wood River for special assessments related to street, water, and sanitary improvements at our Wood River facility. This note requires ten annual payments of $58,000, including interest at 6.5% per annum, and matures in 2018. In addition, the operating subsidiary for the Wood River facility entered into a financing agreement in the fourth quarter of 2012 for the purchase of certain rolling stock equipment to be used at the facility for $208,000. This note requires 24 monthly payments of $9,000, including interest at 6.0% per annum, and matures in 2014.

The following table summarizes the aggregate maturities of our long-term debt as of March 31, 2013 (in thousands):

Remainder of 2013	$	170,606
2014		146
2015		57
2016		60
2017		66
Thereafter		2,466
Total	$	173,401

XML

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Weighted Average Number Of Shares Outstanding Reconciliation [Table Text Block]

A summary of the reconciliation of basic weighted average shares outstanding to diluted weighted average shares outstanding follows:

	Three Months Ended March 31,
	2013			2012
Weighted average common shares outstanding – basic		5,308,161			5,139,590
Potentially dilutive common stock equivalents
Class B common shares		795,479			931,148
Restricted stock		135,131			103,826
		930,610			1,034,974
		6,238,771			6,174,564
Less anti-dilutive common stock equivalents		(930,610	)		(1,034,974	)
Weighted average common shares outstanding – diluted		5,308,161			5,139,590

XML

Noncontrolling Interest

3 Months Ended

Mar. 31, 2013

Noncontrolling Interest [Abstract]

Noncontrolling Interest Disclosure [Text Block]

13. Noncontrolling Interest

Noncontrolling interest consists of equity issued to members of the LLC upon the Company’s initial public offering in June 2007. As provided in the LLC agreement, the exchange ratio of the various existing classes of equity of the LLC for the single class of equity at the time of the Company’s initial public offering was based on the Company’s initial public offering price of $210.00 per share and the resulting implied valuation of the Company. The exchange resulted in the issuance of 897,903 LLC membership units and Class B common shares. Each LLC membership unit combined with a share of Class B common stock is exchangeable at the holder’s option into one share of Company common stock. The LLC may make distributions to members as determined by the Company.

At the time of its initial public offering, the Company owned 28.9% of the LLC membership units of the LLC. At March 31, 2013, the Company owned 87.3% of the LLC membership units. The noncontrolling interest will continue to be reported until all Class B common shares and LLC membership units have been exchanged for the Company’s common stock.

The table below shows the effects of the changes in BioFuel Energy Corp.’s ownership interest in the LLC on the equity attributable to BioFuel Energy Corp.’s common stockholders for the three months ended March 31, 2013 and 2012 (in thousands):

Net Loss Attributable to BioFuel Energy Corp.’s Common Stockholders and

Transfers from the Noncontrolling Interest

	Three Months Ended March 31,
	2013			2012
Net loss attributable to BioFuel Energy Corp.	$	(4,635	)	$	(9,408	)
Increase in BioFuel Energy Corp. stockholders equity from issuance of common shares in exchange for Class B common shares and units of BioFuel Energy, LLC		—			—
Change in equity from net loss attributable to BioFuel Energy Corp. and transfers from noncontrolling interest	$	(4,635	)	$	(9,408	)

Tax Benefit Sharing Agreement

Membership units in the LLC combined with the related Class B common shares held by the historical equity investors may be exchanged in the future for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. The LLC will make an election under Section 754 of the IRS Code effective for each taxable year in which an exchange of membership units and Class B shares for common shares occurs, which may result in an adjustment to the tax basis of the assets owned by the LLC at the time of the exchange. Increases in tax basis, if any, would reduce the amount of tax that the Company would otherwise be required to pay in the future, although the IRS may challenge all or part of the tax basis increases, and a court could sustain such a challenge. The Company has entered into tax benefit sharing agreements with its historical LLC investors that will provide for a sharing of these tax benefits, if any, between the Company and the historical LLC equity investors. Under these agreements, the Company will make a payment to an exchanging LLC member of 85% of the amount of cash savings, if any, in U.S. federal, state and local income taxes the Company actually realizes as a result of this increase in tax basis. The Company and its common stockholders will benefit from the remaining 15% of cash savings, if any, in income taxes realized. For purposes of the tax benefit sharing agreement, cash savings in income tax will be computed by comparing the Company’s actual income tax liability to the amount of such taxes the Company would have been required to pay had there been no increase in the tax basis in the assets of the LLC as a result of the exchanges. The term of the tax benefit sharing agreement commenced on the Company’s initial public offering in June 2007 and will continue until all such tax benefits have been utilized or expired, unless a change of control occurs and the Company exercises its resulting right to terminate the tax benefit sharing agreement for an amount based on agreed payments remaining to be made under the agreement.

True Up Agreement

At the time of formation of the LLC, the founders agreed with certain of our principal stockholders as to the relative ownership interests in the Company of our management members and affiliates of Greenlight Capital, Inc. (“Greenlight”) and Third Point LLC (“Third Point”). Certain management members and affiliates of Greenlight and Third Point agreed to exchange LLC membership interests, shares of common stock or cash at a future date, referred to as the “true-up date”, depending on the Company’s performance. This provision functioned by providing management with additional value if the Company’s value improved and by reducing management’s interest in the Company if its value decreased, subject to a predetermined rate of return accruing to Greenlight and Third Point. In particular, if the value of the Company increased from the time of the initial public offering to the “true-up date”, the management members were entitled to receive LLC membership units, shares of common stock or cash from the affiliates of Greenlight and Third Point. On the other hand, if the value of the Company decreased from the time of the initial public offering to the “true-up date” or if a predetermined rate of return was not met, the affiliates of Greenlight and Third Point were entitled to receive LLC membership units or shares of common stock from the management members.

The “true-up date” occurred on June 19, 2012, which was five years from the date of the initial public offering. Since the value of the Company decreased from the time of the initial public offering to the “true-up date”, the affiliates of Greenlight and Third Point received 69,382 and 34,691 LLC membership units, respectively, from certain members or former members of our management group during the third quarter of 2012 as a result of the “true-up”. No new shares were issued as a result of the “true-up” but rather a redistribution of shares occurred among certain members or former members of our management group and our two largest investors, Greenlight and Third Point.

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

9. Stock-Based Compensation

The following table summarizes the stock-based compensation expense incurred by the Company (in thousands):

	Three Months Ended March 31,
(In thousands)	2013		2012
Stock options	$	90	$	295
Restricted stock		169		112
Total	$	259	$	407

2007 Equity Incentive Compensation Plan

Immediately prior to the Company’s initial public offering, the Company adopted the 2007 Equity Incentive Compensation Plan (“2007 Plan”). The 2007 Plan provides for the grant of options intended to qualify as incentive stock options, non-qualified stock options, stock appreciation rights or restricted stock awards and any other equity-based or equity-related awards. The 2007 Plan is administered by the Compensation Committee of the Board of Directors. Subject to adjustment for changes in capitalization, the aggregate number of shares that may be delivered pursuant to awards under the 2007 Plan is currently 355,000. The term of the 2007 Plan is ten years, expiring in June 2017.

Stock Options — Except as otherwise directed by the Compensation Committee, the exercise price for options cannot be less than the fair market value of our common stock on the grant date. Other than the stock options issued to Directors, the options will generally vest and become exercisable with respect to 30%, 30% and 40% of the shares of our common stock subject to such options on each of the first three anniversaries of the grant date. Compensation expense related to these options is expensed on a straight line basis over the three year service period. Options issued to Directors generally vest and become exercisable on the first anniversary of the grant date. All stock options have a five year term from the date of grant. During the three months ended March 31, 2013 and 2012, the Company did not issue any stock options under the 2007 Plan.

A summary of stock option activity under the 2007 Plan as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Life (years)		Aggregate Intrinsic Value
Options outstanding, January 1, 2013		71,237		$	61.72
Granted		—			—
Exercised		—			—
Forfeited		(1,888	)		117.46
Options outstanding, March 31, 2013		69,349		$	60.20		1.7	$	0.00
Options exercisable, March 31, 2013		69,349		$	60.20		1.7	$	0.00

A summary of the status of our unvested stock options as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Grant Date Fair Value
Unvested, January 1, 2013		10,074		$	46.01
Granted		—			—
Vested		(10,074	)		46.01
Forfeited		—			—
Unvested, March 31, 2013		—		$	—

Restricted Stock  — Other than restricted stock issued to Directors, the restricted stock issued will generally vest in equal increments of 25% on each of the first four anniversaries of the grant date. Compensation expense related to restricted stock issued is expensed on a straight line basis over the four year vesting period. Restricted stock issued to Directors generally vests on the first anniversary of the grant date with compensation expense being expensed on a straight line basis over the one year vesting period. During the three months ended March 31, 2013 and 2012, the Company granted 0 and 78,850 shares, respectively, under the 2007 Plan to certain of our employees and our non-employee Directors.

A summary of restricted stock activity under the 2007 Plan as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Grant Date Fair Value per Award		Aggregate Intrinsic Value
Restricted stock outstanding, January 1, 2013		143,026		$	13.82
Granted		—			—
Vested		(41,798	)		14.40
Cancelled or expired		—			—
Restricted stock outstanding, March 31, 2013		101,228		$	13.58	$	517,275

As of March 31, 2013, there was $1,345,000 of unrecognized compensation expense related to the unvested portion of restricted stock outstanding. This expense is expected to be recognized over three years.

After considering the stock option and restricted stock awards issued and outstanding, the Company had 109,497 shares of common stock available for future grant under our 2007 Plan at March 31, 2013.

XML

Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

7. Stockholders’ Equity

 Reverse Stock Split

On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty. The Company also split the number of authorized shares of common stock at a ratio of one-for-fourteen, thereby reducing the aggregate number of authorized common stock shares to 10,000,000, and also split the number of authorized shares of Class B common stock at a ratio of one-for-twenty, thereby reducing the aggregate number of authorized Class B common stock shares to 3,750,000. All share and per share information and all necessary par value adjustments have been retroactively restated in the financial statements to reflect the effect of this reverse stock split.

Stock Repurchase Plan

On October 15, 2007, the Company announced the adoption of a stock repurchase plan authorizing the repurchase of up to $7.5 million of the Company’s common stock. Purchases will be funded out of cash on hand and made from time to time in the open market. From the inception of the buyback program through March 31, 2013, the Company had repurchased 40,481 shares at an average price of $106.62 per share, leaving $3,184,000 available under the repurchase plan. The shares repurchased are being held as treasury stock. As of March 31, 2013, there were no plans to repurchase any additional shares.

Dividends

The Company has not declared any dividends on its common stock and does not anticipate paying dividends in the foreseeable future. In addition, the terms of the Senior Debt facility contain restrictions on the ability of the Operating Subsidiaries of the LLC to pay dividends or other distributions, which will restrict the Company’s ability to pay dividends in the future.

XML

Derivative Financial Instruments

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

8. Derivative Financial Instruments

The Company offsets amounts of cash collateral deposited with counterparties arising from certain derivative instruments executed with the same counterparty against the fair value amounts reported for those derivative instruments. The Company had no derivative instruments as of March 31, 2013 and December 31, 2012. The effects of derivative instruments on our consolidated financial statements were as follows for the three months ended March 31, 2013 and 2012 (in thousands) (amounts presented exclude any income tax effects).

Effects of Derivative Instruments on Income

		Three Months Ended March 31,
Consolidated Statements of Operations Location		2013		2012
		gain (loss)		gain (loss)
Derivative not designated as hedging instrument:
Commodity contract	Net sales	$	—	$	(880	)
Commodity contract	Cost of goods sold		—		190
	Net amount recognized in earnings	$	—	$	(690	)

In accordance with these provisions, we have categorized our financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded on the Company’s consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date.

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:

· Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently);

· Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and

· Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives).

As of March 31, 2013, we do not have any level 2 financial assets and liabilities.

Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. As of March 31, 2013, we do not have any Level 3 financial assets or liabilities.

There were no transfers between the various financial asset and liability levels during the three months ended March 31, 2013.

XML

Income Taxes

3 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10. Income Taxes

The Company has not recognized any income tax provision (benefit) for the three months ended March 31, 2013 and 2012 due to continuing losses from operations.

The U.S. statutory federal income tax rate is reconciled to the Company’s effective income tax rate as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Tax benefit at 35% federal statutory rate	$	1,865		$	3,883
State tax benefit, net of federal benefit		27			55
Noncontrolling interest		(246	)		(598	)
Valuation allowance		(1,537	)		(3,051	)
Other		(109	)		(289	)
	$	—		$	—

The effects of temporary differences and other items that give rise to deferred tax assets and liabilities are presented below (in thousands):

	March 31, 2013			December 31, 2012
Deferred tax assets:
Capitalized start up costs	$	3,143		$	3,253
Stock-based compensation		965			965
Net operating loss carryover		86,256			84,960
Other		268			266
Deferred tax assets		90,632			89,444
Valuation allowance		(49,081	)		(47,544	)
Deferred tax liabilities:
Property, plant and equipment		(41,551	)		(41,900	)
Deferred tax liabilities		(41,551	)		(41,900	)
Net deferred tax asset	$	—		$	—

The Company assesses the recoverability of deferred tax assets and the need for a valuation allowance on an ongoing basis. In making this assessment, management considers all available positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized in future periods. This assessment requires significant judgment and estimates involving current and deferred income taxes, tax attributes relating to the interpretation of various tax laws, historical bases of tax attributes associated with certain assets and limitations surrounding the realization of deferred tax assets.

As of March 31, 2013, the net operating loss carryforward was $242.4 million, which will begin to expire if not used by December 31, 2028. The U.S. federal statute of limitations remains open for our 2009 and subsequent tax years.

XML

Summary of Significant Accounting Policies (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Remainder of 2013	$ 729
2014	704
2015	8
2016	8
2017	8
Thereafter	33
Total	$ 1,490	$ 1,739

XML

Stock-Based Compensation (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Equity Incentive Compensation Plan 2007 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	355,000
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	ten years
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	109,497
Share-based Compensation Arrangement by Share-based Payment Award, Description	June 2017
Stock Options [Member]
Percentage Of Stock Options Vested Of Common Stock On First Anniversaries Of Grant Date	30.00%
Percentage Of Stock Options Vested Of Common Stock On Second Anniversaries Of Grant Date	30.00%
Percentage Of Stock Options Vested Of Common Stock On Third Anniversaries Of Grant Date	40.00%
Restricted Stock [Member]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	$ 1,345,000
Percentage Of Restricted Stock Vest In Equal Increments On Each Of First Four Anniversaries	25.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	0	78,850

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Schedule of Inventory, Current [Table Text Block]

A summary of inventories is as follows (in thousands):

	March 31, 2013		December 31, 2012
Raw materials	$	6,888	$	8,198
Work in process		3,239		2,831
Finished goods		1,913		2,414
	$	12,040	$	13,443

Schedule Of Property Plant And Equipment Estimated Useful Lives [Table Text Block]

Depreciation is computed by the straight line method over the following estimated useful lives:

	Years
Land improvements	20 – 30
Buildings and improvements	7 – 40
Machinery and equipment:
Railroad equipment	20 – 39
Facility equipment	20 – 39
Other	5 – 7
Office furniture and equipment	3 – 10

Schedule Of Estimated Future Debt Issuance Cost Amortization [Table Text Block]

These costs are being amortized, using an effective interest method, through interest expense over the term of the related debt. Estimated future debt issuance cost amortization as of March 31, 2013 is as follows (in thousands):

Remainder of 2013	$	729
2014		704
2015		8
2016		8
2017		8
Thereafter		33
Total	$	1,490

XML

Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

Effects of Derivative Instruments on Income

		Three Months Ended March 31,
Consolidated Statements of Operations Location		2013		2012
		gain (loss)		gain (loss)
Derivative not designated as hedging instrument:
Commodity contract	Net sales	$	—	$	(880	)
Commodity contract	Cost of goods sold		—		190
	Net amount recognized in earnings	$	—	$	(690	)

XML

Stock-Based Compensation (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2013
Shares Unvested, January 1, 2013 (in shares)	10,074
Shares Granted (in shares)	0
Shares Vested (in shares)	(10,074)
Shares Forfeited (in shares)	0
Shares Unvested, March 31, 2013 (in shares)	0
Weighted Average Grant Date Fair Value Unvested, January 1, 2012 (in dollars per share)	$ 46.01
Weighted Average Grant Date Fair Value Granted (in dollars per share)	$ 0
Weighted Average Grant Date Fair Value Vested (in dollars per share)	$ 46.01
Weighted Average Grant Date Fair Value Forfeited (in dollars per share)	$ 0
Weighted Average Grant Date Fair Value Unvested, March 31, 2013 (in dollars per share)	$ 0

XML

Long-Term Debt (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Remainder of 2013	$ 170,606
2014	146
2015	57
2016	60
2017	66
Thereafter	2,466
Total	$ 173,401	$ 173,429

XML

Consolidated Statement of Changes in Equity (USD $) In Thousands, except Share data	Common Stock [Member]	Common Class B [Member]	Treasury Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2011	$ 53	$ 9	$ (4,316)	$ 187,841	$ (89,277)	$ 94,310	$ 5,632	$ 99,942
Balance (in Shares) at Dec. 31, 2011	5,270,848	931,154
Stock-based compensation	0	0	0	1,490	0	1,490	0	1,490
Exchange of Class B shares to common	1	(1)	0	273	0	273	(273)	0
Exchange of Class B shares to common (In shares)	135,675	(135,675)
Issuance of restricted stock, (net of forfeitures)	0	0	0	0	0	0	0	0
Issuance of restricted stock, (net of forfeitures) (in shares)	77,250	0
Net loss	0	0	0	0	(39,843)	(39,843)	(6,479)	(46,322)
Balance at Dec. 31, 2012	54	8	(4,316)	189,604	(129,120)	56,230	(1,120)	55,110
Balance (in shares) at Dec. 31, 2012	5,483,773	795,479
Stock-based compensation	0	0	0	259	0	259	0	259
Net loss	0	0	0	0	(4,635)	(4,635)	(693)	(5,328)
Balance at Mar. 31, 2013	$ 54	$ 8	$ (4,316)	$ 189,863	$ (133,755)	$ 51,854	$ (1,813)	$ 50,041
Balance (in shares) at Mar. 31, 2013	5,483,773	795,479

XML

Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

4. Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share are calculated using the treasury stock method and includes the effect of all dilutive securities, including stock options, restricted stock and Class B common shares. For those periods in which the Company incurred a net loss, the inclusion of the potentially dilutive shares in the computation of diluted weighted average shares outstanding would have been anti-dilutive to the Company’s loss per share, and, accordingly, all potentially dilutive shares have been excluded from the computation of diluted weighted average shares outstanding in those periods.

 On June 15, 2012, the Company effected a reverse stock split with respect to all outstanding shares of common stock and Class B common stock at a ratio of one-for-twenty. All share and per share information in these financial statements has been retroactively restated to reflect the effect of this reverse stock split.

For the three months ended March 31, 2013 and 2012, 69,349 shares and 72,906 shares, respectively, issuable upon the exercise of stock options were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive.

A summary of the reconciliation of basic weighted average shares outstanding to diluted weighted average shares outstanding follows:

	Three Months Ended March 31,
	2013			2012
Weighted average common shares outstanding – basic		5,308,161			5,139,590
Potentially dilutive common stock equivalents
Class B common shares		795,479			931,148
Restricted stock		135,131			103,826
		930,610			1,034,974
		6,238,771			6,174,564
Less anti-dilutive common stock equivalents		(930,610	)		(1,034,974	)
Weighted average common shares outstanding – diluted		5,308,161			5,139,590

XML

Noncontrolling Interest (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net loss attributable to BioFuel Energy Corp.	$ (4,635)	$ (9,408)
Increase in BioFuel Energy Corp. stockholders equity from issuance of common shares in exchange for Class B common shares and units of BioFuel Energy, LLC	0	0
Change in equity from net loss attributable to BioFuel Energy Corp. and transfers from noncontrolling interest	$ (4,635)	$ (9,408)

XML

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of Share-based Compensation, Activity [Table Text Block]

The following table summarizes the stock-based compensation expense incurred by the Company (in thousands):

	Three Months Ended March 31,
(In thousands)	2013		2012
Stock options	$	90	$	295
Restricted stock		169		112
Total	$	259	$	407

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of stock option activity under the 2007 Plan as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Life (years)		Aggregate Intrinsic Value
Options outstanding, January 1, 2013		71,237		$	61.72
Granted		—			—
Exercised		—			—
Forfeited		(1,888	)		117.46
Options outstanding, March 31, 2013		69,349		$	60.20		1.7	$	0.00
Options exercisable, March 31, 2013		69,349		$	60.20		1.7	$	0.00

Schedule Of Unvested Stock Options Table [Table Text Block]

A summary of the status of our unvested stock options as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Grant Date Fair Value
Unvested, January 1, 2013		10,074		$	46.01
Granted		—			—
Vested		(10,074	)		46.01
Forfeited		—			—
Unvested, March 31, 2013		—		$	—

Schedule Of Restricted Stock Activity [Table Text Block]

A summary of restricted stock activity under the 2007 Plan as of March 31, 2013, and the changes during the three months ended March 31, 2013 is as follows:

	Shares			Weighted Average Grant Date Fair Value per Award		Aggregate Intrinsic Value
Restricted stock outstanding, January 1, 2013		143,026		$	13.82
Granted		—			—
Vested		(41,798	)		14.40
Cancelled or expired		—			—
Restricted stock outstanding, March 31, 2013		101,228		$	13.58	$	517,275

XML

Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Weighted average common shares outstanding - basic (in shares)	5,308,161	5,139,590
Potentially dilutive common stock equivalents
Class B common shares	795,479	931,148
Restricted stock	135,131	103,826
Weighted Average Number Diluted Shares Outstanding Adjustment	930,610	1,034,974
Weighted Average Number Of Shares Outstanding, Basic Including Potentially Dilutive Common Stock Equivalents	6,238,771	6,174,564
Less anti-dilutive common stock equivalents	(930,610)	(1,034,974)
Weighted average common shares outstanding - diluted (in shares)	5,308,161	5,139,590

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Principles Of Consolidation and Noncontrolling Interest [Policy Text Block]

Principles of Consolidation and Noncontrolling Interest

The accompanying consolidated financial statements include the Company, the LLC and its wholly-owned subsidiaries: BFE Holdings, LLC; BFE Operating Company, LLC; Buffalo Lake Energy, LLC; and Pioneer Trail Energy, LLC. All inter-company balances and transactions have been eliminated in consolidation. The Company treats all exchanges of LLC membership units for Company common stock as equity transactions, with any difference between the fair value of the Company’s common stock and the amount by which the noncontrolling interest is adjusted being recognized in equity.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures in the accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company sells its ethanol, distillers grain and corn oil products under the terms of marketing agreements. Revenue is recognized when risk of loss and title transfers upon shipment of ethanol, distillers grain or corn oil. In accordance with our marketing agreements, the Company records its revenues based on the amounts payable to us at the time of our sales of ethanol, distillers grain or corn oil. For our ethanol that is sold within the United States, the amount payable is equal to the average delivered price per gallon received by the marketing pool from Cargill’s customers, less average transportation and storage charges incurred by Cargill, and less a commission. We also sell a portion of our ethanol production to Cargill for export, which sales are shipped undenatured and are excluded from the marketing pool. For exported ethanol sales, the amount payable is equal to the contracted delivered price per gallon, less transportation and storage charges, and less a commission. The amount payable for distillers grain and corn oil is generally equal to the market price at the time of sale less a commission.

Cost of Sales, Policy [Policy Text Block]

Cost of goods sold

Cost of goods sold primarily includes costs of materials (primarily corn, natural gas, chemicals and denaturant), electricity, purchasing and receiving costs, inspection costs, shipping costs, lease costs, plant management, certain compensation costs and general facility overhead charges, including depreciation expense.

Selling, General and Administrative Expenses, Policy [Policy Text Block]

General and administrative expenses

General and administrative expenses consist of salaries and benefits paid to our management and administrative employees, expenses relating to third party services, travel, office rent, marketing and other expenses, including certain expenses associated with being a public company, such as fees paid to our independent auditors associated with our annual audit and quarterly reviews, directors’ fees, and listing and transfer agent fees.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents include highly-liquid investments with an original maturity of three months or less. Cash equivalents are currently comprised of money market mutual funds. At March 31, 2013, we had $9.6 million held at three financial institutions, which is in excess of FDIC insurance limits.

Receivables, Policy [Policy Text Block]

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. The Company does not charge interest for any past due accounts receivable. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction to bad debt expense when received. As of March 31, 2013 and December 31, 2012, no allowance was considered necessary.

Concentrations Of Credit Risk [Policy Text Block]

Concentrations of Credit Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk, whether on- or off-balance sheet, that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.

During the three months ended March 31, 2013 and 2012, the Operating Subsidiaries recorded sales to Cargill representing 73% and 78%, respectively, of total net sales. As of March 31, 2013 and December 31, 2012, the LLC, through its subsidiaries, had receivables from Cargill of $13.9 million and $7.5 million, respectively, representing 89% and 81% of total accounts receivable, respectively.

The Operating Subsidiaries purchase corn, its largest cost component in producing ethanol, from Cargill. During the three months ended March 31, 2013 and 2012, corn purchases from Cargill totaled $70.4 million and $111.8 million, respectively. As of March 31, 2013 and December 31, 2012, the LLC, through its subsidiaries, had payables to Cargill of $10.6 million and $9.0 million, respectively, related to corn purchases.

Inventory, Policy [Policy Text Block]

Inventories

Raw materials inventories, which consist primarily of corn, denaturant, supplies and chemicals, and work in process inventories are valued at the lower-of-cost-or-market, with cost determined on a first-in, first-out basis. Finished goods inventories consist of ethanol and distillers grain and are stated at lower of average cost or market.

A summary of inventories is as follows (in thousands):

	March 31, 2013		December 31, 2012
Raw materials	$	6,888	$	8,198
Work in process		3,239		2,831
Finished goods		1,913		2,414
	$	12,040	$	13,443

Derivatives, Policy [Policy Text Block]

Derivative Instruments and Hedging Activities

Derivatives are recognized on the balance sheet at their fair value and are included in the accompanying balance sheets as “derivative financial instruments”. On the date the derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge). Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge are recorded in other comprehensive income, net of tax effect, until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable rate asset or liability are recorded in earnings). Changes in the fair value of undesignated derivative instruments or derivatives that do not qualify for hedge accounting are recognized in current period operations.

Accounting guidance for derivatives requires a company to evaluate contracts to determine whether the contracts are derivatives. Certain contracts that meet the definition of a derivative may be exempted as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. The Company’s contracts for corn and natural gas purchases and ethanol sales that meet these requirements and are designated as either normal purchase or normal sale contracts are exempted from the derivative accounting and reporting requirements.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. All costs related to purchasing and developing land or the engineering, design and construction of a plant are capitalized. Maintenance, repairs and minor replacements are charged to operating expenses while major replacements and improvements are capitalized. Depreciation is computed by the straight line method over the following estimated useful lives:

	Years
Land improvements	20 – 30
Buildings and improvements	7 – 40
Machinery and equipment:
Railroad equipment	20 – 39
Facility equipment	20 – 39
Other	5 – 7
Office furniture and equipment	3 – 10

Debt, Policy [Policy Text Block]

Debt Issuance Costs

Debt issuance costs are stated at cost, less accumulated amortization. Debt issuance costs included in noncurrent assets at March 31, 2013 and December 31, 2012 represent costs incurred related to the Operating Subsidiaries Senior Debt Facility and tax increment financing agreements. These costs are being amortized, using an effective interest method, through interest expense over the term of the related debt. Estimated future debt issuance cost amortization as of March 31, 2013 is as follows (in thousands):

Remainder of 2013	$	729
2014		704
2015		8
2016		8
2017		8
Thereafter		33
Total	$	1,490

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

The Company has two asset groups, its ethanol facility in Fairmont and its ethanol facility in Wood River, which are evaluated separately when considering whether the carrying value of these assets has been impaired. The Company continually monitors whether or not events or circumstances exist that would warrant impairment testing of its long-lived assets. In evaluating whether impairment testing should be performed, the Company considers several factors including the carrying value of the long-lived assets, projected production volumes at its facilities, projected ethanol and distillers grain prices that we expect to receive, and projected corn and natural gas costs we expect to incur. In the ethanol industry, operating margins, and consequently undiscounted future cash flows, are primarily driven by the crush spread. In the event that the crush spread is sufficiently depressed to result in negative operating cash flow at its facilities for an extended time period, the Company will evaluate whether an impairment of its long-lived assets may have occurred.

Recoverability is measured by comparing the carrying value of an asset with estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved, quoted market prices or appraised values, depending on the nature of the assets. As of March 31, 2013, the Company performed an impairment evaluation of the recoverability of its long-lived assets due to marginal crush spreads. As a result of the impairment evaluation, it was determined that the future cash flows from the assets exceeded the carrying values, and therefore no further analysis was necessary and no impairment was recorded.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

Expense associated with stock-based awards and other forms of equity compensation is based on fair value at grant and recognized on a straight line basis in the financial statements over the requisite service period for those awards that are expected to vest.

Asset Retirement Obligations, Policy [Policy Text Block]

Asset Retirement Obligations

Asset retirement obligations are recognized when a contractual or legal obligation exists and a reasonable estimate of the amount can be made. Changes to the asset retirement obligation resulting from revisions to the timing or the amount of the original undiscounted cash flow estimates shall be recognized as an increase or decrease to both the carrying amount of the asset retirement obligation and the related asset retirement cost capitalized as part of the related property, plant and equipment. At March 31, 2013, the Operating Subsidiaries had accrued asset retirement obligation liabilities of $151,000 and $190,000 for its plants at Wood River and Fairmont, respectively. At December 31, 2012, the Operating Subsidiaries had accrued asset retirement obligation liabilities of $149,000 and $188,000 for its plants at Wood River and Fairmont, respectively.

The asset retirement obligations accrued for Wood River relate to the obligations in our contracts with Cargill and Union Pacific Railroad (“Union Pacific”). According to the grain elevator lease with Cargill, the equipment that is adjacent to the grain elevator may be required at Cargill’s discretion to be removed at the end of the lease. In addition, according to the contract with Union Pacific, the buildings that are built near their land in Wood River may be required at Union Pacific’s request to be removed at the end of our contract with them. The asset retirement obligations accrued for Fairmont relate to the obligations in our contracts with Cargill and in our water permit issued by the state of Minnesota. According to the grain elevator lease with Cargill, the equipment that is adjacent to the grain elevator being leased may be required at Cargill’s discretion to be removed at the end of the lease. In addition, the water permit in Fairmont requires that we secure all above ground storage tanks whenever we discontinue the use of our equipment for an extended period of time in Fairmont. The estimated costs of these obligations have been accrued at the current net present value of these obligations at the end of an estimated 20 year life for each of the plants. These liabilities have corresponding assets recorded in property, plant and equipment, which are being depreciated over 20 years.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company regularly reviews historical and anticipated future pre-tax results of operations to determine whether the Company will be able to realize the benefit of its deferred tax assets. A valuation allowance is required to reduce the potential deferred tax asset when it is more likely than not that all or some portion of the potential deferred tax asset will not be realized due to the lack of sufficient taxable income. The Company establishes reserves for uncertain tax positions that reflect its best estimate of deductions and credits that may not be sustained on a more likely than not basis. As the Company has incurred tax losses since its inception and expects to continue to incur tax losses for the foreseeable future, we will continue to provide a valuation allowance against deferred tax assets until the Company believes that such assets will be realized. The Company includes interest on tax deficiencies and income tax penalties in the provision for income taxes.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. Any derivative financial instruments are carried at fair value. The fair value of the Company’s capital lease and notes payable are not materially different from their carrying amounts based on anticipated interest rates that management believes would currently be available to the Company for similar issues of debt, taking into account the current credit risk of the Company and other market factors. The fair value of the Operating Subsidiaries senior debt, based on an anticipated interest rate of 12%, is estimated to be approximately $155.3 million.

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance. Each of our plants is considered its own unique operating segment under these criteria. However, when two or more operating segments have similar economic characteristics, accounting guidance allows for them to be aggregated into a single operating segment for purposes of financial reporting. Our two plants are very similar in all characteristics and accordingly, the Company presents a single reportable segment, the manufacture of fuel-grade ethanol and the co-products of the ethanol production process.

Recent Accounting Pronouncements [Policy Text Block]

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.