Judge Dismisses Shareholder Suit Over $38M Tech Spinoff

A New Jersey federal judge has dismissed a shareholder derivative lawsuit against the leadership of a material-handling equipment manufacturer and its controlling shareholder, ruling that the plaintiff failed to obtain the required authorization from the British Virgin Islands (BVI) court before proceeding with the claims.

In an unpublished opinion issued Friday, U.S. District Judge Michael A. Shipp granted motions to dismiss filed by Greenland Technologies Holding Corp. (GTEC) and its controlling shareholder, Cenntro Holding Ltd. The judge determined that the lawsuit, brought by GTEC investor Ding Gu, did not meet the procedural requirements established under BVI law, where GTEC is incorporated.

"The BVI Act expressly requires that a shareholder obtain leave from the BVI High Court to initiate a derivative action on behalf of a BVI company," Judge Shipp wrote in his ruling.

Gu, a Delaware resident, originally filed the lawsuit in March 2024, alleging that GTEC’s leadership breached their fiduciary duties by failing to recover debts owed to the company and by orchestrating a spinoff that allegedly benefited GTEC’s board chair, Peter Zuguang Wang. Gu argued that the plan aimed to transfer GTEC’s most valuable assets into a separate company for Wang’s sole benefit. Wang, who also serves as president of Cenntro, is the father of GTEC’s CEO, Raymond Wang. Other named defendants include four additional GTEC directors.

GTEC, headquartered in New Jersey, specializes in manufacturing drivetrain and transmission systems for material-handling equipment such as forklifts. The company is publicly traded on the Nasdaq exchange. Gu’s lawsuit noted that, as of late 2023, Cenntro, which is incorporated and based in Hong Kong, owned nearly 46% of GTEC’s outstanding shares.

According to Gu, Cenntro owes GTEC more than $38 million—an amount the plaintiff claims Cenntro has no intention of repaying. He also alleged that in February 2024, GTEC announced plans to spin off its electric industrial vehicle and drivetrain businesses into two independent, publicly traded companies, despite the fact that its drivetrain segment accounted for 90% of GTEC’s total revenue.

Both GTEC and Cenntro moved to dismiss the lawsuit in September 2024, arguing that Gu’s claims had no legal standing in the U.S. court system. GTEC further contended that the case was improperly filed under U.S. law, stating, "Plaintiff cannot overcome the presumption that BVI law applies," and alleging that Gu attempted to introduce new claims improperly in his opposition to dismissal.

Attorneys for the parties did not immediately respond to requests for comment.

Legal Representation

• Plaintiff Ding Gu is represented by Matthew G. Wapner, Travis J. Ferguson, Kieran T. Ensor, and Wolfgang A. Albrecht III of McCarter & English LLP.
• GTEC and its executives are represented by James DiGiulio, Young Yu, and Adam W. Flannery of O'Toole Scrivo LLC.
• Cenntro Holding Ltd. is represented by Frederick W. Alworth and Jonathan S. Liss of Gibbons PC.

The case is Gu v. Wang et al., case number 3:24-cv-04348, in the U.S. District Court for the District of New Jersey.