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): June 30, 2011

ADVANCED BIOENERGY, LLC

(Exact name of Registrant as Specified in Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

763-226-2701

Registrant’s Telephone Number, Including Area Code

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):

Item 1.01 Entry into a Material Definitive Agreement

Pursuant to a Settlement Agreement dated as of June 30, 2011, Advanced BioEnergy, LLC (the “Company” or “ABE”) resolved all open issues related to: (i) previously reported pending arbitration brought by Revis L. Stephenson III, a former officer of ABE, against ABE (“Stephenson Arbitration”); (ii) previously reported litigation brought by Stephenson against Clean Energy Capital, LLC, a Delaware limited liability company (“CEC”), and Scott Brittenham (“Brittenham”), a director of ABE and an officer of CEC (the “Stephenson Lawsuit”); and (iii) the payment of legal fees by ABE in satisfaction of claims for indemnification by Brittenham in the Stephenson Lawsuit.

Under the terms of the Settlement Agreement and a separate Master Agreement dated as of June 30, 2011 (“Master Agreement”): (i) ABE agreed to pay $3.4 million to Stephenson on June 30, 2011; and (ii) the CEC Obligors (as defined below) agreed to jointly and severally reimburse ABE for $450,000 of the $3.4 million.

The Master Agreement was entered into between by and among ABE, CEC, Ethanol Investment Partners, LLC, a Delaware limited liability company (“EIP”), Ethanol Capital Partners, LP – Series R, a Delaware limited partnership, Ethanol Capital Partners, LP – Series T, a Delaware limited partnership, Ethanol Capital Partners, LP – Series V, a Delaware limited partnership, and Tennessee Ethanol Partners, LP, a Delaware limited partnership (each limited partnership is referred to as a “CEC Partnership” and collectively the “CEC Partnerships”; and the CEC Partnerships and EIP are collectively referred to as the “CEC Obligors”).

In addition to the $3.4 million paid to Stephenson by ABE on June 30, 2011, under the Master Agreement and related documents described below:

ABE completed its payments to Stephenson and its payment of legal fees and costs with respect to its indemnification of Brittenham on June 30, 2011.

Settlement of Stephenson Arbitration

In connection with the execution of the Settlement Agreement described in Item 1.01 of this Form 8-K and the June 30, 2011 payment by the Company, all matters related to the Stephenson Arbitration and the Stephenson Lawsuit have been resolved and both the Stephenson Arbitration and the Stephenson Lawsuit will be dismissed with prejudice.

As previously disclosed, ABE incurred a charge of $2.1 million in the quarter ended March 31, 2011 with respect to the Stephenson Arbitration. ABE will incur an additional charge in the third quarter ended June 30, 2011, reflecting the final resolution of the Stephenson Arbitration and the other matters described in this Form 8-K.

(d) The following exhibits are filed with this Form 8-K.

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.

Date: July 7, 2011