The battle between tech-focused mortgage disruptor Better.com and its recently ousted Founder and CEO Vishal Garg has no end in sight, as Better’s motion for a temporary restraining order to block what it called a “scorched-earth campaign” by Garg was denied on Aug. 28.
U.S. District Judge Margaret M. Garnett of the federal Southern District of New York denied Better’s motion, ruling that the company did not “demonstrate irreparable harm” was done to them by Garg. In her ruling, Garnett stated that to prove Better would likely suffer irreparable harm, the company “must demonstrate an injury that is neither remote nor speculative, but actual and imminent.”
Better had argued that Garg violated securities laws as he rallied shareholders in an attempt to regain his job and remove board members who had voted to fire him back on Aug. 3. Garg has denied these allegations and Garnett noted he had provided updated and amended disclosures related to these efforts both before and after Better filed the suit.
Both sides are now vigorously lobbying shareholders to support their plans, with social media barbs and appeals for their respective plans to turn the company around.
Garg founded Better in 2014 and previously made headlines after his controversial Zoom call in 2021, where he fired about 900 employees just before the holidays.
After the court’s ruling, Garg slammed Better’s board and interim CEO Daniel Lewis on social media, emphasizing Better’s falling stock price and said that he is “glad the courts saw right through it and ruled as they did.”
In its initial complaint, Better cited lackluster results and poor leadership as the reason why the directors removed Garg from his position.
“Under Garg’s leadership, the Company’s stock price declined by more than 90%, and the Company incurred net losses exceeding $1.5 billion since 2022,” the lawsuit said. “Garg himself admitted that the Company would have been better off had the capital raised under his leadership simply been invested in U.S. Treasury securities.”
Better also pointed to Garg’s Zoom call scandal as a basis for his removal, stating that he was “notorious for his mistreatment of employees,” and referred to them as “dumb dolphins” in internal emails.
Although the court denied Better’s restraining order, Garnett noted that, “the Court makes no findings as to whether Garg’s past (or even present) filings fully comply with all relevant securities regulations. The Court need not make those findings because, as explained, injunctive relief cannot issue to correct past harm.”
The lawsuit
Better is suing Garg for allegedly violating the Securities Exchanges Act of 1934, arguing that he did not engage in the proper process to solicit shareholders and planned to reinstate himself as CEO.
In that complaint, Better stated that Garg had acted as Better’s CEO until Aug. 3, where all board members (other than Garg) voted to remove him as CEO and appoint Lewis as interim CEO. But—according to Garg’s version of events in the judge’s memorandum—Garg “was ousted against the will of the majority of shareholders, as part of a ‘coup’ by Lewis and other directors.”
Since then, Better claims that Garg has launched a “scorched-earch campaign to retake control of the Company” and “assembled a group of shareholders to act together to carry out his self-serving agenda,” according to the complaint.
In response to the complaint, Garg claimed in his own court filings that Better has been “less than candid with the Court,” and that the board requested he obtain shareholder declarations, prior to filing the consent solicitation.
He also argues that the board agreed to resign and reconstitute if he could demonstrate that he held majority support from Better’s voting power.
Civic uncivility
Both parties took their feud to social media where they continued the debate. An account on X seemingly associated with Better stated that the court “rejected the Garg Group’s TRO request concerning the rights plan.”
The rights plan is “intended to help protect public shareholders from Mr. Garg’s improper attempt to seize control of the Company without giving public shareholders an opportunity for input or to receive an appropriate control premium,” according to a press release by Better.
Garg’s team, on the other hand, called the rights plan a “poison pill” and argued it, “would purportedly allow the Company to dilute the voting power of Garg and any other shareholders that dares not bend the knee to Lewis and the new regime,” in their memorandum of law.
Both parties also got personal. Garg disparaged Better and said that the, “poison pill was the clearest indication that the board and aren’t fighting for what is best for shareholders.”
Although Better’s motion for a temporary restraining order was denied, the lawsuit is still ongoing, as the court has yet to decide whether Better’s claim that Garg violated the Exchanges Act is true.
