Layla Zulfa
Recent legal victories in New York and Delaware have significantly bolstered Vishal Garg’s campaign to regain control of Better Home & Finance Holding Co., a pivotal moment in the ongoing power struggle for the mortgage lender. Judges in both jurisdictions declined to grant emergency injunctions that would have halted Garg’s efforts to solicit shareholder support, while simultaneously suspending the company’s defensive strategies designed to thwart his comeback. These decisions pave the way for Garg to continue his proxy fight, aiming to oust current directors and reinstate himself as Chief Executive Officer.
The legal battles stem from Garg’s removal as CEO in early August 2026, a move orchestrated by Better’s board of directors who subsequently appointed Daniel Lewis as interim CEO. Undeterred, Garg immediately launched a campaign to leverage shareholder consent, seeking to replace a portion of the board with his own nominees and reclaim his leadership position. The company’s response was swift and aggressive, filing a lawsuit in the U.S. District Court for the Southern District of New York, alleging that Garg had violated key provisions of the Securities Exchange Act, including Sections 13(d) and 14(a). Better’s accusations centered on the formation of an alleged undisclosed "group," the filing of inaccurate ownership disclosures, and the solicitation of proxies without a compliant statement.
However, Judge Margaret M. Garnett of the Southern District of New York rejected Better’s plea for a temporary restraining order and preliminary injunction. The court found that the company had failed to demonstrate it would suffer irreparable harm if Garg’s solicitation activities continued. A crucial factor in Judge Garnett’s decision was the company’s own amended filings with the Securities and Exchange Commission (SEC), which incorporated the substance of Better’s complaint. The court reasoned that these filings, by including Better’s allegations, provided shareholders with sufficient information about the factual disputes at play, thereby mitigating the risk of irreparable injury.
"To be clear, the Court makes no finding as to whether Garg’s past (or even present) filings fully comply with all relevant securities regulations," Judge Garnett stated in her ruling. "The relevant inquiry now is whether the total mix of information sufficiently informs shareholders so as to avoid an irreparable future injury. Better has not carried its burden to prove otherwise." The judge further elaborated that the situation did not present a scenario where "the eggs will be difficult to unscramble" solely due to an alleged regulatory violation, implying that any corporate actions taken following the proxy fight could still be subject to challenge or reversal if necessary. This legal posture suggests that the courts are prioritizing shareholder awareness and the unimpeded flow of information over immediate intervention based on potentially complex disclosure issues.
In a parallel development, the Delaware Court of Chancery delivered another setback to Better’s defensive strategy. Vice Chancellor Lori W. Will sided with Garg, granting his motion for a temporary restraining order that effectively suspends the company’s "poison pill" – a shareholder rights plan – and a special committee of the board established to counter Garg’s campaign. This dual ruling from Delaware further empowers Garg by neutralizing key corporate defenses.
The shareholder rights plan, a common anti-takeover measure, was adopted by Better in conjunction with Computershare, a financial services company. Its primary purpose was to make any hostile change-of-control attempt exceedingly difficult. Under the terms of the plan, if any individual or group acquired beneficial ownership of 15% or more of any class of Better’s common stock, or 15% or more of the company’s total voting power, other shareholders would gain the right to purchase additional shares at a substantial discount. This mechanism is designed to dilute the stake of the potential acquirer, thereby rendering a takeover prohibitively expensive. The plan, which was set to involve the distribution of specific rights based on stock class with an August 31st record date, has now been halted by Vice Chancellor Will’s order.
Vice Chancellor Will’s ruling specifically enjoins Better’s representatives from taking further steps to implement either the poison pill or the special committee while the litigation proceeds. This preservation of the status quo is critical for Garg, as it allows him to pursue shareholder consents without the immediate threat of these corporate defenses being activated. The Delaware Court of Chancery’s intervention underscores a judicial tendency to scrutinize the use of defensive measures during proxy contests, particularly when they are implemented shortly before or during an active solicitation by a significant shareholder.
Background of the Conflict: A Tumultuous Tenure
Vishal Garg’s ouster as CEO was not an isolated incident but rather the culmination of a period marked by significant financial underperformance and internal strife. Prior to his removal in August 2026, Better Home & Finance Holding Co. experienced a dramatic decline in its market valuation. Publicly available financial records indicate that during Garg’s leadership, the company incurred substantial net losses, reportedly exceeding $2 billion. Furthermore, its market value as a public entity plummeted by over 90%. These figures paint a stark picture of the financial challenges Better faced under Garg’s tenure, providing the board with substantial justification for its decision to seek new leadership.
The internal conflict escalated as Garg, despite his removal, maintained a significant stake in the company and a strong base of shareholder support. His subsequent campaign to regain control has been characterized by the company’s board as a "self-serving campaign" aimed at displacing current directors and installing his own loyalists. In a shareholder letter released in response to Garg’s solicitation, the board articulated its strong opposition, highlighting Garg’s "poor track record as leader" and emphasizing the damage inflicted on shareholder value.
"Unfortunately, at a time when the Board needs to be focused on identifying a permanent CEO and overseeing the execution of the Company’s strategy, Mr. Garg continues to press forward with his baseless and distracting campaign," the board stated in the letter. They further warned shareholders against supporting Garg’s bid, asserting, "Over the coming days and weeks, we expect that Mr. Garg will seek to rally support for his cause by claiming that only his strategy, under his oversight, can deliver value for shareholders. But we have seen that movie, and we know how it ended – with persistent losses and billions of dollars of shareholder value destroyed. We have no interest in a sequel, and neither should shareholders." This aggressive rhetoric from the board underscores the deep divisions within the company and the high stakes of the ongoing proxy battle.
Analysis of Legal Implications and Shareholder Impact
The dual court rulings represent a significant tactical victory for Vishal Garg. By preventing the immediate implementation of Better’s defensive measures and allowing his solicitation to proceed, the courts have created a more favorable environment for his campaign to gather shareholder support. The suspension of the poison pill, in particular, removes a substantial hurdle that could have made it exceedingly difficult for Garg to achieve his objective of gaining control. Similarly, the halting of the special board committee deprives the current leadership of a key body designed to counter Garg’s narrative and strategic moves.
From a legal perspective, Judge Garnett’s decision in New York highlights the burden of proof required for companies seeking to halt shareholder solicitations based on alleged disclosure violations. The court’s emphasis on the "total mix of information" available to shareholders suggests that as long as material facts are disclosed, even if disputed, courts may be hesitant to intervene on an emergency basis. This ruling could set a precedent for how similar disclosure-related disputes are handled in the future, potentially empowering dissident shareholders by making it harder for companies to use disclosure arguments as a shield against proxy contests.
Vice Chancellor Will’s ruling in Delaware reinforces the judiciary’s scrutiny of poison pill provisions and special committees, especially when their deployment appears to be primarily aimed at entrenching existing management or the board. The suspension of these measures suggests that courts are increasingly inclined to ensure a level playing field during proxy contests, allowing shareholders to exercise their voting rights without undue impediment.
For shareholders, these rulings mean they will have a more direct and unhindered opportunity to consider Garg’s proposals and the board’s counterarguments. The ongoing legal proceedings, however, are far from over. The courts have only ruled on requests for temporary relief; the underlying claims regarding Garg’s alleged disclosure violations and the appropriateness of Better’s defenses remain to be adjudicated. The ultimate outcome will depend on the final decisions in these broader disputes, which could still lead to significant corporate governance changes or legal remedies.
The immediate implication is that Garg’s campaign will continue with greater momentum. He can now focus on persuading shareholders to support his slate of nominees and his return as CEO, armed with the knowledge that the company’s primary defensive tools have been temporarily neutralized. Conversely, Better’s current leadership faces the challenge of rallying shareholder confidence and effectively countering Garg’s narrative, while navigating the ongoing legal uncertainties. The financial performance of Better Home & Finance Holding Co. in the coming quarters will likely play a crucial role in shaping shareholder sentiment and the ultimate resolution of this high-stakes corporate battle. The saga highlights the dynamic interplay between corporate governance, shareholder activism, and the legal framework governing public companies.
