Ready Capital Corp

From time to time, the Company may be involved in various claims and legal actions in the ordinary course of business.

On June 6, 2024, a purported former stockholder of Broadmark filed a class action lawsuit in the Circuit Court for

Baltimore City, Maryland, captioned Eibling v. Pyatt, et al., Case No. C-24-CV-24-000818 (Md. Cir. Ct. Balt. City), (the

“Broadmark Merger Action”). The Broadmark Merger Action names as defendants Broadmark’s former board of

directors and alleges they breached their fiduciary duties in connection with the Broadmark Merger by failing to properly

consider acquisition proposals that were purportedly superior to the Broadmark Merger, by relying on purportedly false

and misleading valuation analyses, and by authorizing the issuance of a purportedly false and misleading proxy

statement. The Broadmark Merger Action also asserts claims against Broadmark’s financial advisor for aiding and

abetting these alleged breaches of fiduciary duty. The Broadmark Merger Action seeks damages in the form of

compensatory damages, quasi-appraisal damages, rescissory damages, and disgorgement of any merger-related benefits.

The Broadmark Merger Action also seeks reimbursement for litigation expenses and attorneys’ and experts’ fees. On

September 13, 2024, the Broadmark Merger Actionwas assigned to the Business and Technology Case Management

Program of the Circuit Court for Baltimore City, Maryland. Thereafter, on December 10, 2024, the defendants moved to

dismiss the initial complaint. The plaintiff filed an amended complaint on February 10, 2025, which the defendants

subsequently moved to dismiss on April 14, 2025. Briefing on the defendants’ motions to dismiss the amended

complaint is expected to be completed by July 22, 2025. Althoughthe Company is not a defendant in the Broadmark

Merger Action, it is subject to contractual indemnification obligations (conditioned on the satisfaction of various

contractual requirements) in connection therewith, including with respect to the defendants’ service as Broadmark

directors and provision of services to Broadmark, as applicable. Thedefendants and the Company intend to vigorously

defend against the Broadmark Merger Action.

On March 18, 2025, a purported former stockholder of UDF IV filed a class action lawsuit in the Circuit Court for

Baltimore City, Maryland, captioned The Lawrence C. Headley Living Trust v. Jones, et al., Case No. C-24-

CV-25-002222 (Md. Cir. Ct. Balt. City) (the “UDF IV Merger Action”). The UDF IV Merger Action names as

defendants UDF IV’s former board of trustees and alleges they breached their fiduciary duties in connection with the

UDF IV Merger by failing to properly consider an acquisition proposal that was purportedly superior to the UDF IV

Merger, by relying on purportedly false and misleading valuation analyses, by authorizing the issuance of a purportedly

false and misleading proxy statement, and by obtaining improper personal benefits that were not shared with all UDF IV

stockholders. The complaint also asserts claims against UDF IV’s advisor, UMTH General Services, L.P., for aiding and

abetting these alleged breaches of fiduciary duty. The complaint seeks compensatory damages, rescissory damages, and

unwinding of the UDF IV Merger, as well as attorneys’ fees and costs. On April 11, 2025, the UDF IV Merger Action

was assigned to the Business and Technology Case Management Program of the Circuit Court for Baltimore City,

Maryland. The defendants’ motion to dismiss the plaintiff’s complaint is due May 16, 2025, and briefing on the motion

to dismiss is expected to be completed by August 12, 2025. Although the Company is not a defendant in the UDF IV

Merger Action, it is subject to contractual indemnification obligations (conditioned on the satisfaction of various

contractual requirements) in connection therewith, including with respect to the defendants’ service as UDF IV trustees

and the provision of services to UDF IV, as applicable. Thedefendants and the Company intend to vigorously defend

against the UDF IV Merger Action.

On March 6, 2025 and April 23, 2025, the Company and two of its executive officers were named as defendants in two

separate but largely identical putative stockholder class action lawsuits filed in the United States District Court for the

Southern District of New York (the “Securities Class Actions”). The Securities Class Actions are captioned Quinn v.

Ready Capital Corp., et al., No. 1:25-cv-01883 (S.D.N.Y.) (the “Quinn Action”) and Goebel v. Ready Capital Corp., et

al., No. 1:25-cv-3373 (S.D.N.Y.) (the “Goebel Action”). The Securities Class Actions allege that the defendants violated

the Exchange Act and SEC Rule 10b-5 promulgated thereunder by making false and misleading statements and

omissions regarding the performance of the Company’s commercial real estate loan portfolio, and that the executive

officers named as defendants violated Section 20(a) of the Exchange Act as control persons of the Company. The Quinn

Action purports to be brought on behalf of a class of persons who purchased the Company’s common stock between

November 7, 2024 and March 2, 2025, and the Goebel Action purports to be brought on behalf of a class of persons who

purchased the Company's common stock between August 8, 2024 and March 2, 2025. The Securities Class Actions seek

compensatory damages, costs, and expenses on behalf of the purported classes.

On March 19, 2025 and April 9, 2025, the Company was named as a nominal defendant and certain of its executive

officers and directors were named as defendants in two derivative lawsuits pending in the United States District Court

for the Southern District of New York (the “Derivative Actions”). The Derivative Actions are captioned Pittrof v.

Capasse, et al., No. 1:25-cv-02274 (S.D.N.Y.) and Vancampenhout v. Capasse, et al., No. 1:25-cv-02930 (S.D.N.Y.).

The Derivative Actions assert claims for violations of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule

10b-5, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, unjust enrichment, gross

mismanagement, and waste of corporate assets for participating and/or failing to prevent the securities law violations

alleged in the Securities Class Actions and for purportedly causing the Company to overpay for certain stock

repurchases. The Derivative Actions seek compensatory damages, disgorgement of compensation and profits, imposition

of a constructive trust, revisions to the Company’s corporate governance and internal procedures, and attorneys’ fees and

costs.

The defendants intend to vigorously defend against the Securities Class Actions and the Derivative Actions.

As a result of the UDF IV Merger, the Company assumed certain outstanding litigation against UDF IV and affiliated

parties.

On March 20, 2020, Megatel Homes, LLC and certain of its affiliates filed a lawsuit against Mehrdad Moayedi, United

Development Funding, L.P., United Development Funding II, L.P., United Development Funding III, L.P., UDF IV,

United Development Funding V, and various other affiliates (collectivelythe “UDF Defendants”) in the United States

District Court for the Northern District of Texas, captioned Megatel Homes LLC, et al. v. Moayedi, et al., No. 3:20-

cv-00688-L-BT (N.D. Tex.) (the “Megatel Action”). The Megatel Action alleges that the UDF Defendants knowingly

participated in a scheme to “prop” up Moayedi’s companies, and thereby defraud the plaintiffs, by lending funds to

Moayedi’s companies, which Moayedi’s companies then used to repay older loans they had received from the UDF

Defendants, rather than using such funds to “advance” real estate projects with the plaintiffs. The plaintiffs assert claims

under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and for common law fraud, statutory fraud, and

fraudulent inducement. The plaintiffs seek compensatory damages, treble damages, exemplary damages, and attorneys’

fees. On May 18, 2020, the defendants moved to dismiss the plaintiffs’ complaint, which the court granted in part and

denied in part on November 16, 2021. The plaintiffs filed an amended complaint on November 29, 2021, which the

defendants again moved to dismiss. The court denied the motions to dismiss on June 27, 2022. Discovery in the Megatel

Action is substantially complete and on March 5, 2025, the court noted that it will issue a forthcoming order establishing

deadlines for the parties’ respective summary judgment motions and setting a trial date. The UDF Defendants and the

Company intend to vigorously defend against the Megatel Action.

On August 17, 2022, certain former officers, trustees, andadvisors of UDF IV were named as defendants in a lawsuit

filed by former UDF IV stockholder NexPoint Diversified Real Estate Trust and an affiliated entity in the District Court

of Dallas County, Texas, captioned NexPoint Diversified Real Estate Trust, et al. v. UMTH General Services, L.P., et al.,

No. DC-22-09833 (Tex. Dist. Ct. Dallas Cnty.) (the “UDF Advisor Action”). The UDF Advisor Action alleges that the

defendants caused UDF IV to improperly indemnify, advance litigation expenses, and fund settlement amounts in

connection with an SEC civil enforcement action and the subsequent criminal prosecution of UDF IV’s former officers

and trustees. The UDF Advisor Action also alleges that the defendants caused UDF IV to pay improper fees to UDF IV’s

advisor. The UDF Advisor Action asserts claims against the defendants for breaches of fiduciary duty, aiding and

abetting, breaches of the advisory agreement between UDF IV and its advisors, and civil conspiracy and seeks

compensatory damages, punitive damages, costs and fees, as well as specific performance of certain contractual

obligations. On October 12, 2022, the defendants moved to dismiss the lawsuit, which the trial court denied on

November 30, 2022. On March 17, 2023, the plaintiffs filed an amended petition adding certain former UDF IV board

members (the “Trustee Defendants”) to the lawsuit. On May 4, 2023, the Trustee Defendants moved to dismiss the

claims asserted against them and the Trustee Defendants were subsequently dismissed from the lawsuit. On January 9,

2024, the remaining defendants filed a writ of mandamus with the Texas Supreme Court, arguing that the plaintiffs’

claims were derivative (rather than direct) and that the plaintiffs lacked standing to assert their claims because they failed

to make a pre-suit demand on UDF IV’s board of trustees. On January 30, 2024, the Texas Supreme Court stayed the

trial court proceedings pending resolution of the writ. Briefing on the merits of the appeal was completed on February 6,

2025, and on April 4, 2025, the Texas Supreme Court granted oral argument. Although UDF IV and the Company are

not defendants in the UDF Advisor Action, the Company is subject to contractual indemnification obligations

(conditioned on the satisfaction of various contractual requirements) in connection therewith, including with respect to

the defendants’ service as UDF IV officers and trustees and the provision of services to UDF IV, as applicable. The

defendants and the Company intend to vigorously defend against the UDF Advisor Action.

Item 1A. Risk Factors