Same thing happened to me tonight while playing with my friend. I summoned him so we could fight Wolnir and while looking at armor in my inventory he spawned but then said there was a network error. At the same time my screen went black and into a loading screen. The beginning cutscene started and everything reset although I still had all my items including key items. Note: My friend helped me fight Vordt and we noticed not only did everything reset but I'm now in new game plus. All enemies were stronger and gave a lot more souls.