UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported) ~~May~~ September 2812, 2013

VHGI HOLDINGS, INC.

(Exact name of registrant 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	47822
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code 812-268-5459

not applicable

(Former name or former address, if changed since last report)

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

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

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

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

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

Item 1.0103 ~~Entry~~Bankruptcy ~~into~~or ~~a Material Definitive Agreement~~Receivership.

On ~~May~~September 2823, 2013 ~~Lily Group~~, ~~Inc.~~due ~~(“Lily~~to ~~Group”),~~the afailure ~~wholly-owned subsidiary~~ of Hassan ~~VHGI~~Alshaban ~~Holdings,~~Principal and ~~Inc.,~~Al ~~entered~~Rami ~~into~~PureAl ~~a Equity Investment Agreement with Al~~ Rami Pure LLC ~~(the~~to ~~“Investor”). Under~~perform under the terms of ~~this agreement, at closing~~ the ~~Investor~~agreed ~~will~~upon ~~lend~~renegotiated usterms ~~approximately~~of ~~$65~~the ~~million. The~~Equity ~~investment~~Investment ~~will~~Agreement beas ~~for~~described ain ~~maximum~~Item ~~term~~8.01 of 10this ~~years. As consideration~~report, ~~the Investor will receive 45% of~~ Lily Group ~~and~~Inc., a ~~lien~~wholly-owned onsubsidiary ~~Lily~~of ~~Group’s~~VHGI ~~assets~~Holdings, ~~together~~Inc., ~~with~~filed ~~royalties~~a ~~and/or~~voluntarily ~~dividends~~petition atfor ~~the~~reorganization ~~rate~~under ofChapter ~~1.25%~~11 ~~per~~of ~~annum. We have~~ the ~~right~~United toStates ~~buy~~Bankruptcy ~~back~~Code ~~the equity~~ in ~~Lily~~Bankruptcy ~~Group~~Court atfor the ~~end~~Southern District of ~~any calendar year~~Indiana, oncase ~~the~~number: ~~basis~~13-81073-FJO-11. Lily ofGroup, ~~the~~Inc. ~~fair~~remains ~~market~~in ~~valuation~~possession of ~~the~~its ~~outstanding. The~~assets ~~closing~~and ofcontinues ~~the Equity Investment Agreement is subject~~ to aoperate ~~number~~its ofbusiness ~~conditions~~as ~~precedent, including delivery of~~ a ~~letter of credit~~ debtor-in-possession under the ~~amount~~jurisdiction of ~~$10.5 million,~~ the ~~finalization~~Bankruptcy ofCourt ~~a definitive use of proceeds~~ and ~~the company reaching an agreement with its current senior secured lender. We are actively engaged~~ in ~~efforts~~accordance ~~to satisfy these conditions precedent~~ with the ~~goal~~applicable provisions of ~~closing~~ the ~~transaction~~Bankruptcy asCode ~~soon~~and ~~as practicable. However, given~~ the ~~number~~orders of ~~conditions~~the ~~which~~Bankruptcy ~~must be satisfied, there are no assurances this transaction will be consummated~~Court.

~~Effective~~Item ~~May~~2.04 ~~28,~~Triggering ~~2013~~Events ~~Lily~~That ~~Group~~Accelerate ~~also~~or ~~entered~~Increase ~~into~~ a ~~Memorandum~~Direct ofFinancial ~~Understanding~~Obligation ~~with~~or ~~Lily Group Holdings Company (“LGHC”),~~ an ~~entity~~Obligation ~~owned~~under by Mr. Risinger, our Chief Executive Officer. Pursuant to the terms of the Memorandum of Understanding, LGHC will obtain the aforementioned letter of credit and certain other personal guarantees required by the Investor to satisfy the security requirement for the loan. As consideration, Lily Group will permit LGHC to hold the net proceeds of the loan in an ~~account~~Off-Balance ofSheet ~~its choosing and release the funds for Lily Group’s benefit in accordance with the specific use of proceeds to be agreed upon by Lily Group and the Investor~~Arrangement.

WeAs ~~previously~~a ~~reported~~result ~~that~~of inthe ~~April~~filing ~~2013~~of wethe ~~entered~~Chapter ~~into~~11 apetition ~~similar~~described ~~loan~~in ~~agreement~~Item ~~with~~1.03 ~~Ariana~~of ~~Turquoise~~this ~~Investment AS~~report, ~~the~~an ~~closing~~event of ~~which~~default ~~was~~has ~~subject~~occurred pursuant to the ~~satisfaction~~terms of ~~certain~~the ~~conditions~~$13,000,000 ~~precedent. Those~~Note ~~conditions~~Purchase ~~precedent~~Agreement ~~were~~between ~~not~~Lily ~~satisfied~~Group Inc. and ~~that~~Platinum ~~agreement~~Partners ~~was~~Credit ~~not~~Opportunities ~~consummated~~Master Fund LP. ~~The~~ ~~aforedescribed~~VHGI ~~Equity~~Holdings, ~~Investment~~Inc. ~~Agreement~~is ~~represents~~also ~~replacement~~in ~~financing~~default ~~for~~of ~~our~~all outstanding notes and obligations identified in the company’s 10k filed June 26, 2013.

Item 8.01

Other Events.

On September 12, 2013 Lily Group, Inc., a wholly-owned subsidiary of VHGI Holdings, Inc., notified Al Rami Pure LLC that it was terminating the Equity Investment Agreement between the parties as a result of the failure of Hassan Alshaban Principal of Al Rami Pure and Al Rami Pure LLC to perform under the terms of the agreement. Lily Group Inc. is attempting to close the final issue of the failed transaction by successfully retrieving the deposited funds placed on deposit within the UAE banks associated with this transaction.

SIGNATURES

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

	VHGI Holdings, Inc.
Date: June 19, 2013	By: /s/ Paul R. Risinger
Date: September 24, 2013	By: /s/ Paul R. Risinger
	Paul R. Risinger, Chief Executive Officer

Filing Compare · VHGI HOLDINGS, INC.