Courts in New York and Delaware simultaneously blocked Better.com's poison pill defenses this week, clearing procedural runway for founder Vishal Garg's proxy campaign to retake board control of the digital mortgage lender he founded in 2014. The dual temporary restraining orders—issued within 48 hours of each other—strip the company's board of its primary anti-takeover mechanism and force an open shareholder contest. Garg, who was removed as CEO in 2022 after terminating 900 employees via Zoom, now owns approximately 93% of voting stock and is deploying roughly $160 million in capital commitments to regain operational authority.

The restraining orders do not decide the underlying merits. They establish that Garg has sufficient likelihood of success to warrant maintaining the status quo ante while discovery proceeds. New York's Commercial Division and Delaware's Court of Chancery—two venues rarely aligned on emergency corporate governance—both concluded that Better's poison pill adoption in late March carried procedural defects sufficient to justify interim relief. The Delaware opinion specifically noted timing: the pill was adopted 11 days after Garg filed preliminary proxy materials, a sequence suggesting reactive rather than prophylactic governance. Better's board had argued the pill was necessary to prevent coercive tactics by a controlling shareholder, but neither court found that argument persuasive at the TRO stage.

The immediate effect is mechanical: Better must process Garg's director nominations without the dilution threat the poison pill represented. Proxy materials are due for final SEC clearance by mid-May, with a shareholder meeting likely in June. Garg's slate seeks to replace four of Better's seven board members, installing executives with experience in consumer lending technology and SPAC restructurings. Better's current board—led by former Fannie Mae executive Timothy Mayopoulos—has argued that Garg's leadership created operational instability, citing the 2022 Zoom layoffs and subsequent employee attrition. Garg's counterargument is financial: Better burned $340 million in cash during 2023 under the current management, while mortgage origination volume fell 62% year-over-year.

The restraining orders also expose capital structure friction. Better completed a SPAC merger in 2021 at an implied valuation of $7.7 billion, then saw its stock collapse to under $1 per share by early 2023. Garg has since provided multiple bridge financings—most recently a $100 million senior secured note in January—giving him effective veto power over any strategic transaction. The poison pill was Better's attempt to limit that influence, but the dual TRO rulings suggest courts view founder-financier dynamics differently when the founder is also the primary capital source keeping the company solvent. Delaware's opinion hinted at this, noting that Better's independent directors have "limited financial leverage" absent Garg's continued support.

Operators should track three items. First, the SEC's review of final proxy materials, expected by May 15—any delay signals either Better is contesting disclosures or the SEC sees valuation questions worth additional comment rounds. Second, whether Better's board seeks expedited discovery to challenge Garg's beneficial ownership calculations, which would indicate they believe his 93% voting stake overstates true control due to warrant structures or pledge agreements. Third, whether Better files for voluntary Chapter 11 before the shareholder meeting—an option that would suspend the proxy contest but also trigger cross-default provisions on Garg's bridge notes, effectively forcing a prepackaged bankruptcy with Garg as DIP lender.

The real disclosure is in the Delaware opinion's footnote seven: Better's board acknowledged in sealed briefing that the company has 72 days of cash at current burn rates without additional Garg financing. That number does not appear in any public filing. The poison pill was not about governance philosophy. It was about negotiating position in a refinancing where the majority shareholder is also the only available creditor.