Vishal Garg and Better Home & Finance will square off before a federal judge as the sides' boardroom battle reaches a major early hurdle. 

U.S. District Judge Margaret M. Garnett on Wednesday afternoon will listen to Better's motion for a temporary restraining order on Garg to stop his shareholder rally, according to a case docket. The company says the former CEO, seeking to return to his post, can begin collecting proxies from shareholders Thursday morning once a consent solicitation he filed last week becomes effective. 

"If through those solicitations he accumulates a bare majority of the outstanding voting power of the company, he can enact his corporate takeover, which presents a real and irreparable harm to the company and its shareholders," wrote Lewis in a declaration published Monday. 

The lender is suing Garg for securities violations, alleging his shareholder solicitations were improper, and that his Securities and Exchange Commissions filings are still incomplete. They're seeking a 30-day pause on Garg's efforts, and have meanwhile enacted a "poison-pill" plan to defuse his shareholder powers. 

Garg responded in court Tuesday, refuting the securities violations claims and explaining Better's fault for his "administrative error" in previously pledging a majority of shareholder support he garnered. He also shared screenshots of his text messages with board members and Lewis, which suggest their contradictory actions following Garg's removal. 

The founder is seeking to remove board members and embark on a comeback strategy he says will help recoup the over $200 million in lost market value shareholders have suffered since his Aug. 3 ouster. 

Better's mixed messaging

Following his removal, Garg says Better offered him a lucrative vice chairman role to advise Lewis, which he turned down because of its limited scope and responsibility to address wider concerns. 

Days later he said he met with two of Better's directors, who said they regretted hiring Lewis. The board members told Garg that they and two additional directors would resign from the board to aid Garg's return plan if he could demonstrate a majority of shareholder support via a requisition letter. 

The ex-CEO then gathered support representing 51.65% of Better's voting power, which he represented to the company and the media earlier this month. However, Garg explained that turned out to be an administrative error from Better's in-house securities and regulatory counsel. 

In reality, some of Garg's shares were convertible options that couldn't be voted on, he said. However, the company didn't explain the discrepancy to Garg's attorneys when they asked about it last week, and the company sued him for his alleged securities filings violations a day later. 

Garg suggests his updated SEC filings render Better's motions to block his solicitations moot. In a renewed proxy statement Tuesday, the ex-CEO said his group currently represents 13.7% of the company's outstanding shares of voting stock. 

The Garg-Lewis relationship

In a separate filing Tuesday, Garg included screenshots of dozens of alleged text messages from Lewis, which portray the former hedge fund boss and investor as supportive before turning a cold shoulder.

One March text simply read "I actually love you," with no context; another shows Lewis commiserating with Garg on the demands of the CEO role, with Lewis allegedly writing, "I don't want to be an operating CEO because I know the toll it takes on me." 

While Garg shared Lewis' alleged texts on the day of his firing offering comfort, a final message on Aug. 11, shortly after Garg's first attorney letter to Better, took a different tone.

"Vishal. Remember, every move you make — I have planned for it in advance,"  the interim CEO allegedly wrote. 

Lewis acknowledged the texts to the New York Post Tuesday, while Better declined to comment. Vishal Garg also did not share a comment beyond his legal filings. 

Next steps

Better is also seeking a preliminary injunction on Garg on top of a potential temporary restraining order, although Judge Garnett will only weigh the TRO. Garg in court filings argued that the injunction would block aggrieved shareholders from taking action against Better's board.

The sides have traded barbs in recent weeks, with both sides raising concern over Better's past and current performance. While Better has pointed to $1.5 billion in net losses under Garg since 2022, the ex-CEO has pointed to the company's stark stock price decline since his firing. 

Garg is pitching a return plan including a $30 million stock buyback, and a $5 million personal investment as part of a 10b5-1 stock plan. He's also pledged to work for a $1 salary until the company becomes profitable, and embark on a search for a long-term CEO.

"Prompt action is needed to reverse the substantial decline in the company's stock price that followed the Board's installation of Lewis as the Interim CEO," he wrote in a filing. "To restore confidence among the Company's capital markets counterparties and business partners, and to put the company on a path to recover the losses that common shareholders have already sustained."