Skip to content
Join our Newsletter

Investors burned in Istuary bankruptcy claim auction process for group’s assets was a ‘fraud’

BIV's lawsuit of the week
justiceclose3

A group of more than two dozen investors who lost funds in the high-profile bankruptcy of the Istuary Group after founder Ethan Sun fled to China claim in court that the auction process for the group’s assets was marred by false information and shenanigans by former insiders.

The group of 27 investors filed two petitions in BC Supreme Court on November 22. The first petition names Kimberley Robertson, Jack Yong, Lawson Lundell LLP, McMillan LLP, Gowlings LLP, Deloitte Restructuring Inc., Yi An Sun aka Yian Sun aka Ethan Sun, Network Intelligence Inc., Netint Technologies Inc. aka 1130489 B.C. Ltd., Lixin Wang, Shi Gang Wang, Renke Nie and Chengao Zhu as respondents.

The petitioners claim that Istuary founder Ethan Sun has been in China since May 2017 and that documents bearing his electronic signature were never properly notarized. The investors claim that when Ethan Sun’s Network Intelligence Inc. declared itself insolvent in April or May 2017, former director Lixin Wang and respondents Shi Gang Wang and Renkie Nie founded a new company months later, respondent Netint Technologies Inc.  Shortly after incorporating, the new company lent Network Intelligence US$1.2 million for more than 62% of the Network’s shares.

“In one month’s time Netint immediately declared that the US$1.2 million dollars loan was due,” the petition states. Network Intelligence was then forced into bankruptcy in October 2017 and the investors claim that all “documents, statutory declarations and contracts” related to the bankruptcy proceedings contained Ethan Sun’s “blind electronic signatures only” and that he “never signed any of these documents in front of a Chinese notary.”

Meanwhile, the second petition names Network Intelligence Inc., Netint Technologies Inc. aka 1130489 B.C. Ltd., Lixin Wang, Shi Gang Wang, Renke Nie, Tao Zhong, Wei Liu, John Plasterer, Athena Solutions Ltd. and Deloitte Restructuring Inc. as respondents. It states that the auction process for the Istuary Group’s assets was marred by fraud, “false information” and omissions by Netint, its directors and Deloitte Restructuring Inc.

The investors allege the auction should be “declared null and void by reasons of possible auction frauds committed by some or all of the respondents.”

According to the investors, respondent Tao Zhong was a lead technician of the Istuary Group’s research and development team producing its flagship “PCIe Chipset 4.0 product.”

“Tao Zhong used to hold himself out as leading technician for ‘Istuary’ group of companies, accepting media interviews on behalf of Istuary,” the petition states. “When [Network Intelligence] went bankrupt in late 2017, Tao Zhong signed a non-compete agreement with Netint, essentially undertook only to work for Netint, thereby eliminating the possibility of anyone except Netint acquiring [Network Intelligence].”

“Within one year Netint is now worth hundreds of millions of Canadian dollars,” the investors claim. “Without Tao Zhong et al, all [Network Intelligence’s] goodwill, patents and intellectual properties would be rendered worthless.”

Furthermore, “no genuine auction ever took place.”

Both petitions remain untested in court, and the respondents had not filed responses by press time.