The Better.com saga continues
Aurora’s filing says that Better’s financial performance “deteriorated” as a result of numerous factors, including fluctuating and increasing interest rates, the continued impact of the reorganization of its sales and operations teams in the third quarter of 2021, continued investments in its business (including investments to expand its product offerings) and the effects of “negative media coverage” following, and severance costs associated with, a series of mass layoffs that began on December 1, 2021.
Well before Better.com garnered negative media coverage due to the manner in which CEO and co-founder Vishal Garg callously laid off 900 employees, the controversial executive made headlines for being the target of multiple lawsuits by PIMCO, Goldman Sachs and other investors involving entities he controlled. In fact, the ongoing litigation is considered to be a risk factor for the company, according to the filing, in that it could divert Garg’s attention from its business “regardless of the outcome,” as well as inflict damage to, “or negatively affect,” its reputation. (Shocker!) For example, Garg is involved in ongoing litigation that involves accusations that he “breached his fiduciary duties to another company he co-founded, misappropriated intellectual property and trade secrets, converted corporate funds and failed to file corporate tax returns.”
In another action the filing goes on to detail, plaintiff investors in a prior business venture claim they did not receive required accounting documentation and that Garg misappropriated funds that should have been distributed to them.
Notably, the amount of losses covered by the side letter is uncapped, and Garg alone “remains responsible for all such losses, which could require him to, among other things, sell a significant portion of his holdings in Better Home & Finance common stock, which could negatively impact the trading price of Better Home & Finance common stock.”
Whoa. That’s an enormous amount of responsibility for one person to take on, and indicates a certain level of arrogance, er, confidence on the part of Garg.
“I might be foolish,” he wrote, “but I believe in us. I believe in you.”
Meanwhile, numerous employees who work outside of the company’s New York headquarters have shared with TechCrunch that they are having trouble collecting unemployment benefits because the online mortgage lender failed to pay the appropriate taxes. So, in other words, Better.com continues to screw over its employees even after laying them off.
Last but not least, multiple sources also have shared that Better.com over the past week or so offered its workers in India the option to leave under a voluntary separation agreement. Apparently, more workers put their hands up — a reported 90% of 2,100 — than the company expected and it had to put a cap on how many workers could leave. From what I hear, it was mostly “closers and analysts” who were allowed to leave and about 920 workers total had their resignations accepted. One individual shared an email from HR India turning down their request saying that the worker was “part of a mission-critical team” at Better.com. A separate email from a “Joel” that went to the company’s operations team outlining a structural reorganization said the need to offer voluntary separation to the company’s India employees was due to recognition that “there are declines ahead and responding to these to ensure Better is positioned for profitability remains essential.”
I’ve also had multiple sources tell me that the company let go of a number of midlevel managers in the U.S. — many believed to be underwriting managers.
The saga continues.
I reached out to Better.com for comment but had not heard back at the time of writing.
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Well, that’s it for this week. It felt like there was even more news than normal, which proves just how much activity continues to take place in the world of fintech. Thank you so much for reading, and see you next week!