According to local television news outlet WYMT, the workforce was let go on Friday, the producer’s last day of operations.

In late March, the company publicised its year-long struggle with federal Chapter 11 bankruptcy but had hopes to emerge from bankruptcy – even withdrawing a previous move to convert the case to Chapter 7 liquidation.

Reuters reported at the time that Black Diamond was planning a bankruptcy court-supervised auction of its assets, where the company’s senior lenders could submit a bid.

"If successful, the senior lenders would own a significant majority of the company's equity upon emergence," company representatives said.

Black Diamond chief executive officer Larry Hull said he was optimistic the company would exit bankruptcy as a going concern during the first half of 2009.

An involuntary petition was filed against Black Diamond last February by CIT Capital USA, Prudential Insurance Co of America and The CIT Group/Commercial Services.

The motion to convert the case to Chapter 7 was submitted last December by Bull Creek Coal, Floyd County Resources and Prater Creek Coal.

The Prestonburg, Kentucky-based producer controls about 200 million tons of reserves but owed more than $US150 million against its revenues for 2007, which totalled about $100 million. At that time, its primary contract miner threatened to stop operations for non-payment.

Black Diamond had an annual production of more than 2 million tons from three surface mines and 10 underground mines in eastern Kentucky.