UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):		~~February~~April 1422, 2013
VHGI HOLDINGS, INC.
(Exact name of Company as specified in its charter)
Delaware	000-17520				75-2276137
(State or other jurisdiction of incorporation)	(Commission File Number)				(IRS Employer Identification No.)
103 North Court Street, Sullivan, IN				47882
(Address of principal executive offices)				(Zip Code)
Company’s telephone number, including area code:			(812) 268-5459
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions (see General Instruction A.2. below):

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement.

(a) On ~~Series~~April D22, ~~Exchange~~2013,VHGI Holdings, Inc. (the “Company”), Lily Group Inc., an Indiana corporation and indirect wholly-owned subsidiary of the Company (“Lily”), and Ariana Turquoise Investment AS, a Marshal Islandscorporation (the “Lender”), entered into a loan agreement (the “Loan Agreement”) under which, if all closing conditions are met, the Lender would agree to lend to Lily a total of $65,047,083.33 (the “Loan”), subject to the terms and conditions set forth therein. The Loan would have a term of ten years and accrue interest at a rate of 4.25% per annum, with payments of interest being made annually in advance (except for the first such payment, which could be deducted from the proceeds of the Loan).

OnIn ~~February~~addition ~~18,~~to ~~2013,~~Lender’s ~~VHGI~~completion ~~Holdings,~~of ~~Inc.~~additional ~~(the~~diligence ~~“Company”) entered into an agreement (the “Exchange Agreement”) with Paul R. Risinger, our Chief Executive Officer~~ and ~~sole~~other ~~director~~closing ~~(“Risinger”).~~conditions ~~Pursuant~~set toforth in the ~~Exchange~~Loan Agreement, ~~the~~Lender’s ~~Company~~obligation ~~issued~~ to ~~Risinger~~make ~~500,000~~disbursements ~~shares~~under of the ~~Company’s~~Loan ~~Series~~is Dexpressly ~~Convertible~~conditioned ~~Preferred~~upon ~~Stock in exchange for~~ the ~~assignment to the~~ Company's ofsecuring ~~$3,000,000 in principal amount~~ of a ~~promissory note in the original principal amount of~~ $~~17,000,000,~~13 ~~made~~million byletter ~~the Company’s wholly-owned subsidiary, VHGI Coal, Inc., in favor~~ of ~~Risinger~~credit.

~~Lily~~Item ~~Group~~2.03 Creation ~~Loan~~of ~~Agreement~~a Direct Financial Obligation or an Obligation under an Off-BalanceSheet Arrangement of a Registrant.

~~Pursuant to a Loan Agreement dated as of February 26, 2013~~ (~~the “Loan Agreement”~~a)~~—which~~ As ~~was~~described ~~entered~~in ~~into~~further bydetail ~~and~~under ~~among~~Item ~~the Company, Lily Group Inc~~1.,01 ~~an Indiana corporation (“Lily”)~~above, ~~Lily~~on ~~Group~~April ~~Holdings Company~~22, ~~an Indiana corporation (“LGHC”)~~2013, ~~Risinger, James W. Stuckert and Diane V. Stuckert (together,~~ the ~~“Stuckerts”),~~Company and ~~Solomon Oden Howell, Jr. (“Howell” and, together with the Stuckerts, the “Lenders”)—~~Lily ~~secured~~entered ainto ~~total of $6,000,000 in revolving debt (~~the “Loan”) ~~pursuant~~Agreement to: (i) a Secured Drawdown Promissory Note in the original principal amount of up to $5,000,000 (the “Secured Note”), and (ii) an unsecured Drawdown Promissory Note in the principal amount of up to $1,000,000 (the “Secondary Note,” and, collectively with the ~~Secured Note, the “Notes”)~~Lender.

As evidenced by a Subordination Agreement, dated as of February 26, 2013, by and among Platinum Partners Credit Opportunities Master Fund LP (“Platinum”), the Lenders, and Lily (and agreed and consented to by the Company and its remaining subsidiaries), amounts under the Secured Note will be secured by a first priority lien on up to $5,000,000 of the equipment portion of collateral (excluding fixtures) by which certain debt held by Platinum under that certain Note Purchase Agreement, dated as of February 16, 2012 (the “Platinum Agreement”), is currently secured. Pursuant to a fourth amendment to the Platinum Agreement, dated as of February 26, 2013, $500,000 of the proceeds of the Notes will be used to retire $500,000 of principal owed by Lily to Platinum under the Platinum Agreement.

The Lenders are making the Loan out of the proceeds received from a Revolving Loan and Security Agreement entered into as of February 15, 2013, with Regions Bank (the “Regions Loan Agreement”). In connection with and as inducement for Regions Bank to enter into the Regions Loan Agreement, each of Risinger and LGHC has entered into a guaranty under which they will be liable for all obligations under the Regions Loan Agreement. As consideration for such guaranty, and for Lenders’ entrance into the transactions described above, each of Risinger, Howell, and the Stuckerts was issued a warrant for purchase of 2,000 shares of the Company’s Series E Convertible Preferred Stock (as described in Item 5.03 below), subject to certain antidilution provisions as set forth therein.

Pursuant to a payoff letter dated as of February 26, 2013, an additional portion of the proceeds of the Drawdown Note is being used to pay amounts owed by Lily in favor of HEB Ventures, LLC, pursuant to a loan agreement, and secured by a security agreement, of even date therewith.

Item 3.02 Unregistered Sales of Equity Securities.

As described in further detail in Item 1.01 above:

· On February 18, 2013, the Company issued a total of 500,000 shares of its Series D Convertible Preferred Stock to Risinger in connection with the Exchange Agreement.

· On February 26, 2013, the Company issued the Warrants in connection with the Loan Agreement.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

(a)

Effective February 14, 2013, the Company filed a Certificate of Designations, Preferences, Rights and Limitations designating 100,000 shares of a new Series E Convertible Preferred Stock.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.	Description
4.1	Certificate of Designations, Preferences, Rights and Limitations of Series E Convertible Preferred Stock
10.1	Promissory Note,dated February 18, 2013, made by VHGI Coal, Inc. in favor of VHGI Holdings, Inc.
10.2	Exchange Agreement, dated February 18, 2013
10.3	Loan Agreement, dated February 26, 2013
10.4	Security Agreement, dated February 26, 2013
10.5	Secured Drawdown Promissory Note, dated February 26, 2013
10.6	Drawdown Promissory Note, dated February 26, 2013
10.7	Form of Warrant
10.8	Payoff Letter, dated as of February 26, 2013

Exhibit No. Description

10.1	Loan Agreement dated April 22, 2013

SIGNATURES

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

		VHGI HOLDINGS, INC.
		(Company)
Date	~~February~~April 2826, 2013
By:		/s/ Paul R. Risinger
Name:		Paul R. Risinger
Title:		Chief Executive Officer

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