China Green, the Hong Kong trading firm named this week as a defendant in a court writ filed by troubled financial firm Convoy Global Holdings, has denied it was a placee in a share placement linked to Convoy's former chairman, who is now being sued for asset theft from the HK$4.04 billion placement. China Green was named by stock commentator and activist investor David Webb in the so-called "Enigma Network" of 50 listed businesses that he claimed had cross holdings in each other, including Convoy, and had approved loans and transactions, which did not make any commercial sense. It suspended trading on Wednesday after the company was sued by Convoy in a legal action filed on Tuesday against 28 defendants for causing it substantial financial losses. China Green was named as the 23rd of 28 defendants listed in the writ, filed by units of Convoy under its new management, now being led by interim chairman Johnny Chen Chi-wang. The plaintiffs alleged agricultural products supplier China Green was among a number of placees in a shares sale in October 2015. Earlier this month, three of Convoy's executive directors were arrested by Hong Kong's anti-graft body the Independent Commission Against Corruption, after which Convoy suspended its duties and named them in the writ as defendants. Many of the "Enigma" stocks crashed on June 27 abruptly, by between 20 per cent and 90 per cent. Convoy shares have been suspended since December 7. "The company can confirm that it was not a placee for the share placement," China Green said in a company filing to Hong Kong's bourse late on Wednesday. "It is currently the company's plan to file an acknowledgement of service, indicating that it will contest the proceedings on or before 2 January 2018 and will file a defence to defend the claims. "The company is currently seeking legal advice on the matter to assess the merits of the claims and their implications on the company." China Green suspends trading after being sued by Convoy as 'Enigma Network' fallout continues The placees were described in the writ filed by units of Convoy to be associates of Convoy's former chairman Roy Cho Kwai-chee. Cho is described in the writ to be a "shadow director" who gradually acquired control of Convoy since 2013 by appointing his associates even though he did not have any formal role in the firm until he became an executive director this year. In the writ, Cho is accused of being the mastermind behind an asset theft from the HK$4.04 billion placement, with the help of a complex network of companies. The proceeds were supposed to be used to fund business development, but was later circulated to other companies in his network through "circular financing agreements", causing "substantial loss and damage" to Convoy, the writ claims. China Green shares will resume trading on Thursday, after trading was halted on Wednesday pending the announcement. In another twist, Jun Yang Financial Holdings, whose subsidiary Classictime Investments was named as the 24th defendant in the same writ has said in a separate filing to the bourse that it had bought 1.45 billion shares in the Convoy placement. But it paid for the shares without obtaining margin financing from any party, Jun Yang said, adding Classictime sold all those shares between August 15 and September 29 this year. "Classictime made its decisions to invest in and divest of the placing shares as a matter of pure commercial judgment and independent of Roy Cho, his alleged associates in the writ and the plaintiffs," Jun Yang said. "Classictime was not a party to any circular financing arrangement as alleged in the writ ... [and] it did not act ... in concert with [Roy Cho or any of his alleged associates]". Read the original article on South China Morning Post. For the latest news from the South China Morning Post download our mobile app. Copyright 2017.