Key facts
- Founder Vishal Garg has sued Better Home & Finance Holding Co., interim CEO Daniel Lewis, and six board members.
- The lawsuit, filed in Delaware, alleges illegal entrenchment and seeks to invalidate the board's 'poison pill' and special committee.
- Garg claims he was terminated as CEO without notice or cause.
- Better's stock has fallen nearly 60% since Garg's ouster.
- Garg is challenging a 'poison pill' defense adopted by the board with a 15% ownership trigger.
Vishal Garg, the founder of Better Home & Finance Holding Co., has filed a lawsuit in the Delaware Court of Chancery against the company, its interim CEO Daniel Lewis, and six board members. Garg alleges that the defendants illegally entrenched themselves after ousting him as CEO, using tactics such as a 'poison pill' defense and the formation of a special committee to thwart shareholder voting rights.
The complaint, filed Tuesday, brings counts of breach of fiduciary duty and two claims for declaratory judgment. Garg contends that Lewis, founder of activist hedge fund Orange Capital, maneuvered his way onto Better's board on July 27 and subsequently convinced the board to terminate Garg as CEO on August 3 without notice or cause. According to the suit, Better's stock has declined nearly 60% since Garg's dismissal, with large stockholders reportedly demanding his return.
Garg claims he was offered a position as vice chairman and advisor to the CEO, which included a $750,000 annual salary and an equity award worth over $15 million, but declined due to the limited scope of the role. Subsequently, two directors allegedly offered Garg two board seats if he could demonstrate 50.1% stockholder support. Garg stated he gathered consents but, due to an administrative error based on company-provided data, overstated his support to 51.65% when he held approximately 45%.
This legal action follows a previous lawsuit filed by Better against Garg on August 18 in the U.S. District Court for the Southern District of New York, alleging unlawful solicitation and disclosure violations. Garg has opposed Better's motion for a preliminary injunction and temporary restraining order, arguing the action is without merit. Garg also disputes the formation of a special committee that excluded him, which then adopted a poison pill on August 20 with a 15% ownership trigger, citing its overly broad provisions that could chill shareholder communication.