Courts in New York and Delaware issued temporary restraining orders blocking Better.com's poison pill defense, clearing the way for founder Vishal Garg to mount a proxy fight against the board that removed him as CEO in December. The New York ruling came first, followed hours later by a parallel order in Delaware Chancery Court. Better's board adopted the poison pill—a 15% ownership trigger—on January 15, six days after Garg filed preliminary proxy materials seeking to replace five directors. The Delaware judge found Garg demonstrated a reasonable probability of success on his claim that the pill was adopted in bad faith to entrench management.

Garg controls roughly 93% of Better's voting stock through dual-class shares but holds only 28% economic interest. The company went public via SPAC merger in May 2023 at a $1.2B valuation, down from a $6B private peak in 2021. Better's board argues Garg's conduct—including a mass Zoom firing of 900 employees in December 2021 and subsequent regulatory scrutiny—makes him unfit to lead. Garg counters that the current board has overseen a 68% decline in share price since the SPAC close and failed to execute a turnaround in mortgage origination volumes, which fell 41% year-over-year in Q4 2024. The company's stock trades at $0.87 per share as of Friday's close, giving it a market capitalization of roughly $330M.

The dual rulings create a narrow window for Garg to solicit proxies ahead of Better's annual meeting, now scheduled for April 18. The poison pill would have diluted Garg's voting control to below 10% had he acquired additional shares or solicited proxies from other shareholders. The temporary restraining orders expire in 14 days unless extended pending a full preliminary injunction hearing. Better's board has not yet filed opposition briefs in either jurisdiction, but discovery is set to begin Monday. The company's independent directors—appointed as part of the SPAC merger agreement—face a credibility test: they must argue that a founder with 93% voting control lacks the right to nominate directors, a position Delaware courts have historically viewed with skepticism absent clear showing of harm to minority shareholders.

Allocators should watch three pressure points. First, whether Better's board seeks an emergency stay at the Delaware Supreme Court before the restraining orders expire, which would signal the company intends to fight the proxy contest through litigation rather than shareholder vote. Second, the preliminary injunction hearing scheduled for late February, where the court will decide if the poison pill remains blocked through the annual meeting. Third, whether Garg files additional claims challenging the board's refusal to provide shareholder lists, which he needs to solicit proxies. Better has 1,247 record holders as of its latest proxy statement, but the beneficial ownership count is closer to 8,400 accounts, most of them retail investors who bought into the SPAC at prices above $8 per share. If Garg wins the shareholder list within 10 days, he has time to run a full proxy solicitation campaign. If not, the vote becomes a test of whether retail shareholders default to management recommendations or punish the board for capital destruction.

The Delaware judge noted in her order that Garg's voting control makes the poison pill "unlikely to withstand scrutiny under Blasius or Schnell." That language matters. It signals the court views this as a case of board entrenchment, not shareholder protection, and sets a high bar for Better to justify the pill at the preliminary injunction stage. The company's next required disclosure—a 10-K filing due March 31—will show whether mortgage origination volumes stabilized in Q1 2025, the only fundamental datapoint that might shift the narrative in management's favor.