Ready Capital Corp

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

Merger litigation

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., 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. In response, 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 was completed on 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 the 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., 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 former 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. Thereafter, on May 16, 2025, the defendants moved to dismiss the initial complaint. In response, the plaintiff

filed an amended complaint on July 11,2025, which the defendants subsequently moved to dismiss on September 9,

2025. Briefing on the defendants’ motion to dismiss the amended complaint is expected to be completed by December

2026. 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.

Securities and derivative litigation

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 “Exchange Act Class Actions”). The Exchange Act Class Actions were filed under

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

al., No. 1:25-cv-3373 (S.D.N.Y.). The Exchange Act Class Actions allege that the defendants violated Section 10(b) of

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 loan portfolio and related matters, and that the executive officers

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

Class Actions seek compensatory damages, costs, and expenses on behalf of the purported classes. On July 8, 2025, the

court entered an order consolidating the Exchange Act Class Actions under the caption In re Ready Capital Securities

Litigation, No. 1:25-cv-01883 (S.D.N.Y.) (the “Exchange Act Litigation”) and appointing lead plaintiff and lead

counsel. Lead plaintiff filed an amended complaint on September 8, 2025, and briefing on the defendants’ forthcoming

motion to dismiss is expected to be completed by March 2026.

Between March and July 2025, the Company was named as a nominal defendant and certain of its executive officers and

directors were named as defendants in parallel derivative lawsuits 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.) respectively, filed in the United States

District Court for the Southern District of New York (collectively, the “New York Derivative Actions”), and Poon v.

Ready Capital Corp., et al., No. 1:25-cv-01827 (D. Md.) and Cote v. Ready Capital Corp., et al., No. 1:25-cv-02429-JRR

(D. Md.) filedin the United States District Court for the District of Maryland (the “Maryland Derivative Actions” and,

together with the New York Derivative Actions, the “Ready Capital Derivative Actions”). The Ready Capital Derivative

Actions assert claims for violations of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, contribution

under Sections 10(b) and 21D of the Exchange Act, breach of fiduciary duties, aiding and abetting breach of fiduciary

duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets for participating and/or

failing to prevent the securities law violations alleged in the Exchange Act Litigation and for purportedly causing the

Company to overpay for certain stock repurchases. The Ready Capital 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. On July 8, 2025, the United States District Court for

the Southern District of New York consolidated the New York Derivative Actions under the caption In re Ready Capital

Corp. Stockholder Derivative Litigation, No. 1:25-cv-02274 (S.D.N.Y.). The Ready Capital Derivative Actions are

currently stayed, pending: (1) dismissal of the Exchange Act Litigation with prejudice, and the exhaustion of all appeals

thereto; or (2) denial, in full or in part, of the defendants’ motion to dismiss the Exchange Act Litigation. The defendants

intend to vigorously defend against the Exchange Act Litigation and the Ready Capital Derivative Actions.

In early August 2025, the Board received a demand letter from a purported Ready Capital stockholder (the “Derivative

Demand Letter”). The Derivative Demand Letter closely mirrors the allegations of the Exchange Act Litigation and

Ready Capital Derivative Actions and demands that the Board investigate the facts alleged in these actions. The

Derivative Demand Letter requests that the directors investigate any purported wrongdoing that occurred between

August 2, 2024, and August 1, 2025, and commence legal proceedings against the Ready Capital executive officers and

directors named in the Exchange Act Litigation and Ready Capital Derivative Actions. The Company and the demanding

stockholder have agreed to hold the Derivative Demand Letter in abeyance until: (i) the defendants’ motion to dismiss in

the Exchange Act Litigation is denied in whole or in part; or (ii) the demanding stockholder or the Company give written

notice that they no longer consent to the voluntary abeyance of the Derivative Demand Letter.

On May 8 and May 14, 2025, the Company and certain of its executive officers and directors were named as defendants

in two separate but largely identical putative class action lawsuits filed by purported former Broadmark stockholders in

the Superior Court for King County, Washington (the “Broadmark Securities Act Class Actions”). Certain former

directors and officers of Broadmark and certain affiliates of the Company and its directors, including Waterfall, were

also named as defendants. The Broadmark Securities Act Class Actions were filed under the captions van Wyk et al. v.

Ready Capital Corp., et al., No. 25-2-14038-5 SEA (Wash. Super. Ct. King Cnty.) and Whittlesey v. Ready Capital

Corp., et al., No. 25-2-14567-1 SEA (Wash. Super Ct. King Cnty.). The Broadmark Securities Act Class Actions allege

that the defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act by making false and misleading

statements and omissions in connection with the Broadmark Merger regarding the performance of the Company’s loan

portfolio and related matters and seek disgorgement, compensatory damages, and the costs and expenses of litigation. On

June 20, 2025, the court consolidated the Broadmark Securities Act Class Actions under the caption In re Ready Capital

Corporation Securities Litigation, No. 25-2-14038-5 SEA (Wash. Super. Ct. King Cnty.) (the “Broadmark Securities Act

Litigation”). On August 19, 2025, the plaintiffs filed a consolidated complaint, which the defendants subsequently

moved to dismiss on October 20, 2025. Briefing on the defendants’ motion to dismiss is expected to be completed by

December 2025.

On May 28, 2025, the Company and certain of its executive officers and directors were named as defendants in a

putative class action filed by a purported former Broadmark stockholder in the United States District Court for the

Western District of Washington (the “Broadmark Exchange Act Litigation”). Broadmark and certain of its former

directors and officers were also named as defendants. The Broadmark Exchange Act Litigation is captioned Grant v.

Ready Capital Corp., et al., No. 2:25-cv-1013 (W.D. Wash.). The Broadmark Exchange Act Litigation alleges that that

the defendants violated Sections 14(a) and 20(a) of the Exchange Act by making false and misleading statements and

omissions in connection with the Broadmark Merger and seeks compensatory and rescissory damages, as well as

attorneys’ fees and litigation expenses. On October 15, 2025, the court entered an order appointing lead plaintiff and lead

counsel. Lead plaintiff's amended complaint will be filed on or before November 25, 2025. Briefing on defendants'

forthcoming motion to dismiss is expected to be completed by March 2026.

On July 18, 2025, the Company and Broadmark were named as nominal defendants, and certain of the Company’s and

Broadmark’s current and former executive officers and directors and Waterfall were named as defendants in a double

derivative action filed by a purported former stockholder of Broadmark in the United States District Court for the

District of Maryland (the “Broadmark Derivative Litigation”). The Broadmark Derivative Litigation is captioned

Murguia v. Broadmark Realty Capital Inc., et al., No. 1:25-cv-02350-JRR (D. Md.). The Broadmark Derivative

Litigation asserts claims for violations of Sections 10(b), 20(a), and 14(a) of the Exchange Act, SEC Rule 10b-5, breach

of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and

contribution pursuant to Section 10(b) and 21D of the Exchange Act forparticipating inand/or failing to prevent the

securities law violations alleged in the Broadmark Exchange Act Litigation and for purportedly causing the Company to

overpay for certain stock repurchases. The Broadmark Derivative Litigation seeks revisions to the Company’s corporate

governance and internal procedures, disgorgement, compensatory damages, and attorney’s fees and costs of litigation.

The Broadmark Derivative Litigation is currently stayed, pending: (1) dismissal of the Broadmark Exchange Act

Litigation with prejudice, and the exhaustion of all appeals thereto; or (2) denial, in full or in part, of the defendants’

motion to dismiss the Broadmark Exchange Act Litigation. The defendants intend to vigorously defend against the

Broadmark Securities Act Litigation, the Broadmark Exchange Act Litigation, and the Broadmark Derivative Litigation.

Legacy UDF IV litigation

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 the Texas Supreme Court held oral argument on September 9, 2025. 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