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Black Diamond files plan to emerge from bankruptcy

* Files plan to emerge from Chapter 11

* Says motion to convert case into Chapter 7 withdrawn

* Says plans to conduct auction for its assets

March 24 (Reuters) – Black Diamond Mining Company LLC, which produces coal in Central Appalachia, said it filed a plan with a U.S. bankruptcy court to emerge from Chapter 11 and an earlier motion to convert its case to a Chapter 7 liquidation had been withdrawn.

The company also said it plans to conduct a bankruptcy-court-supervised auction for substantially all of its assets within the next two months.

Black Diamond’s senior lenders will submit a bid for the assets, it said in a statement.

“If successful, the senior lenders would own a significant majority of the company’s equity upon emergence,” the company said in a statement.

Chief Executive Officer Larry Hull said, “I am optimistic that Black Diamond will exit bankruptcy as a going concern during the first half of 2009.”

Black Diamond was forced into Chapter 11 bankruptcy by its creditors in February last year.

Bull Creek Coal Corp, Floyd County Resources Inc and Prater Creek Coal Corp had filed a motion last December asking for a court order converting the case into a Chapter 7 liquidation.

The case is In re: Black Diamond Mining Company LLC, No 08-70066, U.S. Bankruptcy Court, Eastern District of Kentucky, (Pikeville Division) (Reporting by Santosh Nadgir in Bangalore; Editing by Vinu Pilakkott)

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