The mounting war of words between Better's board of directors and its former CEO is escalating, as the former goes public in its defense to prevent Vishal Garg from regaining control. 

In a company update issued publicly on Monday, a special committee of the Better Home and Finance board emphasized that the early-month removal of Garg, who founded the company in 2014, served the best interests of its shareholders. 

"The decision to appoint Daniel Lewis as interim chief executive officer, transition away from founder-led executive leadership and conduct a search for a permanent CEO was supported by every director other than Better's founder and former CEO, Vishal Garg," it affirmed on Monday. 

The latest salvo between Garg and the board of Better comes just days after the formation of the special committee, which was introduced to curb any attempts by the controversial former chief executive to alter a shareholder base that could lead to the removal of directors and his reinstallation as CEO. In the weeks since his ouster, Garg said that a majority of shareholders welcomed his return, although he later acknowledged errors in some of the numbers he provided. 

Directors adopt a poison-pill plan

After accusing Garg of unlawfully trying to solicit shareholders, the company sued its ex-leader last week for alleged violations of securities laws. In an attempt to prevent Garg from using his influence to seize control of the company, it also announced a shareholder-rights plan to dilute the potential leverage of his votes, which hold more sway than those of other investors.

With disproportionate power available to Garg thanks to his ownership of super-voting shares, the plan serves as a poison pill or defense mechanism that would defuse any potential move by him or his allies that could lead to a seizure of the company without consultation of other stakeholders or a control-premium payment. 

The rights plan permits any shareholder to purchase outstanding stock at a substantial discount once another person or group's percentage of Better ownership exceeds 15% in either total equity or voting power. The plan triggers as soon as an individual party exceeds the 15% threshold. 

"The consequences of returning Mr. Garg to an operating role should be understood by all: the risk of further destruction of shareholder value (the Company's stock price declined by more than 90% during his tenure as CEO), damage to Better's corporate culture and morale (which is now improving) and a long shadow cast over the permanent CEO search," the company stated in a press release Monday. 

Garg had not responded to a request for comment prior to publication of the article. 

The directors underscored last week that their effort was not an attempt to minimize the will of shareholders or prevent them from supporting Garg or others that disagreed with board leadership.  

Better leadership ousted Garg from his post in August, replacing him with Lewis, a former banking and hedge fund manager, in what was first described as a mutual agreement. In the days following the announcement, Garg pointed to the company's plummeting stock price as proof that the lender would be better off with him back at the helm.

Shares of Better stock were priced at $11.73 at the close of Monday's trading, down by over 57% from its value of $27.30 on Aug. 3, the day Garg was removed. 

For its part, Better said on Monday it was on track to achieving public guidance for the third quarter and expects a return to growth. It also expects to see $45 million in annualized cost reductions.