Courts in New York and Delaware issued temporary rulings this week that strip Better.com's board of its poison pill defense and allow founder Vishal Garg to continue his proxy campaign, at least through the next stage of litigation. The New York court blocked enforcement of the shareholder rights plan on Thursday. Delaware followed hours later with a temporary restraining order preventing the board from using the pill to dilute Garg's position. Neither ruling is final. Both courts scheduled preliminary injunction hearings for mid-May, meaning the current posture could reverse within 30 days.

Better.com adopted the poison pill in March after Garg, who owns roughly 30 percent of the company through direct and affiliate stakes, announced plans to nominate a competing slate of directors. The board set the trigger threshold at 15 percent, a level Garg already exceeded. The pill would have allowed other shareholders to buy discounted shares if Garg acquired more stock or solicited proxies without board approval. Garg's legal team argued the defense was adopted solely to entrench management ahead of a shareholder vote on unwinding the company's 2021 SPAC merger with Aurora Acquisition Corp. The merger brought Better public at a $6.9 billion valuation. The stock now trades at a fraction of that figure, and the board has proposed de-merging to take the company private again.

The dual rulings matter because they briefly open a path for Garg to consolidate support before the de-SPAC vote, which the board has scheduled for late May or early June. If the poison pill had remained in force, Garg would have been unable to communicate directly with other large shareholders or acquire additional shares without triggering massive dilution. The TRO lifts that constraint for now. Whether it stays lifted depends on the preliminary hearings. Delaware Chancery Court will hear arguments on the pill's validity under state corporate law. New York Supreme Court will assess whether the board breached fiduciary duties by adopting a defense that effectively disenfranchises the company's largest shareholder. Both cases hinge on the same question: whether the board acted to protect shareholders from coercion or simply to block a founder it had previously tried to remove.

Better.com's board forced Garg to step down as CEO in 2021 after he fired 900 employees over a Zoom call, then reinstated him months later when the company struggled to find a replacement. The proxy fight is the latest iteration of that governance tension. Garg's slate includes former executives and investors who backed Better during its venture phase. The board's slate includes directors installed after the SPAC merger, several with ties to Aurora's sponsor. The de-SPAC vote gives shareholders a choice between staying public under the current board or going private under terms that would likely give Garg operational control again. The TRO rulings don't resolve that choice. They simply ensure Garg can make his case before the vote happens.

Operators and allocators should watch the preliminary hearing dates, both set for the week of May 12. If either court declines to extend the TRO into a preliminary injunction, the poison pill snaps back into effect and Garg's proxy campaign stalls. If both courts extend the injunction, the board loses its primary defense and the vote becomes a straight referendum on governance. Also watch the de-SPAC proxy materials, which Better must file at least 20 days before the shareholder meeting. Those filings will show whether Garg has lined up enough votes to win without acquiring more shares, or whether he needs to buy additional stock to force the outcome. The pill's trigger threshold remains 15 percent even under the TRO, meaning Garg can't cross that line without risking renewed litigation.

The rulings arrived the same week Better reported Q1 origination volume down 41 percent year-over-year, in line with broader mortgage market contraction but steeper than most competitors. The company has not updated its cash runway guidance since February, when it disclosed $180 million in liquidity and projected breakeven by year-end. Neither figure appears in the recent court filings, which focus narrowly on the poison pill's procedural validity rather than the company's underlying performance. The board's argument for the pill rests on protecting shareholders from a conflicted founder. Garg's argument rests on protecting shareholders from a board that has presided over a 92 percent stock decline since the SPAC merger closed. The preliminary hearings will test which narrative the courts find more credible.