Delaware Chancery and New York Supreme Court both issued temporary restraining orders blocking Better.com's poison pill defense, allowing founder Vishal Garg's proxy campaign to proceed toward a shareholder vote scheduled for late May. The dual rulings, announced within 48 hours of each other, prevent the board from invoking its shareholder rights plan while leaving the merits fight for later.
Better.com adopted the poison pill in March after Garg, who holds roughly 16% of outstanding shares through affiliates, filed preliminary proxy materials seeking three board seats. The pill triggers at 10% beneficial ownership and would dilute any activist who crosses that threshold without board approval. Garg's legal team argued the pill was adopted specifically to entrench management after his December return as CEO, a role he had vacated in 2022 following mass-layoff controversies that included a 900-employee Zoom termination. The board countered that Garg's ownership disclosure was incomplete and that the pill protects all shareholders from creeping control.
The temporary orders mean Garg can now solicit votes without risking dilution, but neither court ruled on whether the poison pill itself violates fiduciary duties or corporate law. Delaware Chancery set a preliminary injunction hearing for mid-April, while New York's calendar remains fluid. If either court lifts the restraining order before the shareholder meeting, the pill reactivates and Garg's campaign could face immediate dilution risk. The company has not disclosed whether it will seek expedited appeals, though sources familiar with the board's posture say counsel is evaluating interlocutory relief.
Better.com's $7.7B SPAC merger collapsed in November 2021, leaving the company private and reliant on a $750M SoftBank credit facility that matures in Q1 2026. The mortgage origination business reported $2.1B in funded volume for Q4 2024, down 22% year-over-year, while headcount has fallen to roughly 4,200 from a 2021 peak above 9,000. Garg's proxy statement argues the current board has failed to monetize the company's digital infrastructure or pursue strategic alternatives despite deteriorating margins. The board's opposition statement, filed last week, points to Garg's prior governance lapses and suggests his return as CEO was conditional on a standstill agreement he is now violating.
Allocators and operators should watch three events. First, Delaware's preliminary injunction hearing in mid-April will determine whether the poison pill survives past the shareholder vote. Second, Better.com must file its definitive proxy statement by late April under New York law, which will clarify the exact slate of nominees and any board expansion proposals. Third, SoftBank's stance becomes critical if Garg wins seats and pushes for asset sales or a restructuring that could impair the credit facility's covenants. SoftBank has not commented publicly, but its 48% equity stake through Vision Fund 2 gives it blocking rights on major corporate actions.
The shareholder vote is scheduled for May 29, and proxy advisory firms typically issue recommendations 10 days prior. Garg's campaign has not yet disclosed whether it will seek full board control or settle for minority representation, but the legal victories position him to negotiate from strength if either court declines to reinstate the pill.