UPDATE 1-Sino Clean suspends ops at Dongguan facility

May 21 (Reuters) - China-based Sino Clean Energy Inc said a local court asked it to close its plant in Dongguan in China pending the outcome of a lawsuit filed against Yongchang Paper Industry Co Ltd, the former owner of the facility.

Sino Clean, a coal-water slurry fuel producer, had bought about 30 acres of land and a factory from the Yongchang Paper Industry Co Ltd, a startup paper company, for $5.6 million in August 2010.

Yongchang subsequently failed to start its operations on time, prompting its creditors to sue the paper company. Yongchang's facilities were sealed in December last year.

Yongchang also failed to transfer the land-use right certificate of the property to Sino Clean on time, Sino Clean said.

As a result, a local court issued an order last week to seal Sino Clean's facility as well, the energy company said.

Production at the facility was suspended on Friday, Sino Clean said, adding it was trying to identify alternative production options and might lease additional facilities.

Nasdaq halted trading in the company's stock earlier today, citing a request for additional information.