Courts in New York and Delaware blocked Better.com's poison pill defense on the same day, leaving founder Vishal Garg's proxy campaign intact and stripping management of a key anti-takeover mechanism at the temporary restraining order stage. The dual rulings came within hours of each other, an unusual coordination that signals judicial skepticism toward the board's defensive posture in a sector already navigating $42 billion in mortgage origination volume declines year-over-year.
Better's board had adopted a shareholder rights plan—commonly called a poison pill—to dilute any investor crossing a 15% ownership threshold without prior approval. The plan targeted Garg, who holds approximately 23% of outstanding shares and has been mounting a campaign to replace at least three directors at the next shareholder meeting. Both courts issued temporary restraining orders blocking enforcement of the pill, citing preliminary findings that the mechanism likely violated fiduciary duties or exceeded board authority under the circumstances presented. Delaware Chancery and New York Supreme Court do not typically coordinate on timing, making the simultaneity worth noting for what it reveals about the strength of Garg's initial evidentiary showing.
The housing finance sector has seen six similar governance disputes in the past eighteen months, but none involving a founder with operational control over a platform still processing $8.7 billion in annual loan volume. Better's servicing portfolio remains active across 11 states, and the company's technology infrastructure supports white-label origination partnerships with four regional banks. A prolonged board fight creates execution risk during a refinancing cycle that strategists expect to accelerate in Q3 2025 if the Federal Reserve holds rates steady through June. Allocators watching non-bank mortgage originators have already repriced Better's junior debt by 140 basis points wider since the proxy campaign became public in early April.
What makes this dispute material beyond governance theater is Better's $1.2 billion line of credit with a syndicate led by Citigroup, which contains a change-of-control provision that could trigger accelerated maturity if Garg successfully reconstitutes the board and installs a new CEO. The credit facility matures in November 2026, and any early termination would force Better into warehouse line negotiations during a period when non-bank lenders are already facing 18% higher collateral requirements from their banking counterparts. The sector's aggregate warehouse capacity has contracted by $14 billion since January, and Better's existing lines represent roughly 9% of its total funding base.
Operators and allocators should monitor three near-term events: the preliminary injunction hearing scheduled for late May in Delaware Chancery, which will determine whether the poison pill stays blocked through the annual meeting; the proxy vote itself, expected in mid-June based on Better's historical meeting calendar; and any amendment or waiver negotiations with the Citi-led lending syndicate, which typically surface in 8-K filings 10-15 days after a material governance event. The credit agreement contains a 30-day cure period for change-of-control triggers, giving both sides a narrow window to negotiate if the board composition shifts.
Better processed $731 million in loan originations in March, a 22% sequential increase that suggests the platform's operational continuity has not yet eroded despite the governance fight. The next inflection point is whether Garg's slate wins enough seats to force a CEO transition before the November credit facility review.