Pacific Ethanol, Inc. (PEIX): Michael Lau’s Candlewood Investment Group Bought More Shares

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 2)*

Pacific
Ethanol, Inc.

(Name of Issuer)

Common Stock, $0.001 par value

(Title of Class of Securities)

69423U305

(CUSIP Number)

Janet Miller

Chief Operating Officer and General Counsel

Candlewood Investment Group, LP

555 Theodore Fremd Ave., Suite C-303

Rye, NY 10580

(212)
493-4495

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

April 7, 2016

(Date of
Event Which Requires Filing of this Statement)

If the filing
person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following
box.  ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for
other parties to whom copies are to be sent.

The information required on the remainder of this cover page
shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).

Item 4 is amended and restated as follows:

The Reporting Persons became beneficial owners of more than 5% of the outstanding Common Stock in connection with the Aventine Purchase, when
the Reporting Persons received shares of Common Stock, as well as shares of Non-Voting Common Stock, as consideration for their ownership of Aventine.

The Reporting Persons believe that the public markets, which represent only a small portion of the ethanol industrys ownership profile,
currently undervalue the Common Stock of the Issuer (the Securities) based on transactions in assets comparable to the Issuers assets. The Reporting Persons believe that, in light of Issuers substantial asset holdings,
certain of which are currently unencumbered by debt (based on the Reporting Persons review of the Issuers public filings), and potential strategic interest in other ethanol related production assets, there are transactions that the
Issuer can engage in to improve shareholder value. The Reporting Persons intend to engage in constructive dialogue with the Issuers Board of Directors and third parties regarding various strategic alternatives including, but not limited to,
capital structure optimization, asset monetization or a sale or merger of the Issuer (including, without limitation, transactions that would cause the Issuer to cease being a public company).

In addition, subject to a number of factors, including the market valuation of the Issuer, changes in market or industry conditions, other
investment opportunities and capital available to the Reporting Persons, and the availability of Securities at prices that would make the purchase or sale of such Securities desirable, the Reporting Persons may endeavor (i) to increase or decrease
their respective ownership in the Issuer through, among other things, the purchase or sale of Securities on the open market or in private transactions on such terms and at such times as the Reporting Persons may deem advisable and/or (ii) to enter
into transactions that increase or decrease their economic exposure to the Common Stock without affecting their beneficial ownership of shares of Common Stock.

The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may from time to time in the future express
their views to and/or meet with management, the Board of Directors of the Issuer or third parties. The Reporting Persons may in the future formulate plans or proposals regarding the Issuers business, strategies, assets, corporate
governance, Board of Directors composition, and other matters related to the Issuer that are referred to in paragraphs (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons may also change their intention with any of the foregoing
matters.

Item 5 is amended and restated as follows:

(a)-(b) The information set forth in rows 7 through 13 of the cover pages to this Schedule 13D is incorporated by reference. The percentage set
forth in row 13 is based on 38,982,931 outstanding shares of Common Stock as of March 14, 2016, as reported in the Issuers Form 10-K/A filed on March 16, 2016. Certain private investment funds advised by the Investment Manager or an entity
controlled by the Investment Manager, including the Special Situations Fund and the OC Fund, directly hold the shares of Common Stock. The Fund GP serves as general partner to certain of these private investment funds, including the Special
Situations Fund and the OC Fund.

The Special Situations Fund, the OC Fund and certain other private investment funds advised by the
Investment Manager or an entity controlled by the Investment Manager also directly hold shares of non-voting common stock, $0.001 par value, of the Issuer (the Non-Voting Common Stock). The Special Situations Funds holds 1,797,147
shares of Non-Voting Common Stock; the OC Fund holds 1,350,577 shares of Non-Voting Common Stock; and certain other private investment funds advised by the Investment Manager or an entity controlled by the Investment Manager hold, in the aggregate,
391,744 shares of Non-Voting Common Stock. The Non-Voting Common Stock are convertible on a one-for-one basis into Common Stock (i) if the holder of such shares of Non-Voting Common Stock and any of its affiliates would not, after such conversion,
beneficially own greater than 9.99% of the Companys outstanding shares of Common Stock and (ii) no earlier than sixty-one days after the Company receives a notice of conversion from the holder. Because the Reporting Persons cannot acquire such
converted Common Stock within sixty days, they do not have beneficial ownership of such converted Common Stock.

(c) Schedule B sets
forth all transactions with respect to the Common Stock effected by any Reporting Person and any person named in Schedule A during the past sixty days.

(d) The private investment funds advised by the Investment Manager or an entity controlled by the Investment Manager that directly hold the
shares of Common Stock have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock (the Economic Interest) reported as beneficially owned by the
Investment Manager, the Fund GP, the Manager GP and the Managing Partners. The Economic Interest of each of the Special Situations Fund and the OC Fund exceeds five percent of the Common Stock.

(e) Not applicable

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true,
complete and correct.

Dated: April 8, 2016

Schedule B

Except as otherwise noted below, all such transactions were purchases of Common Stock effected in the open market, and the weighted average price per share
includes commissions paid.