Ready Capital Corp

Proceedings

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

Merger litigation

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 was completed on December 18, 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. The

defendants 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 certain 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. The lead plaintiff filed an amended complaint on September 8, 2025, which the defendants moved to dismiss on

November 10, 2025. Briefing on the defendants’ motion to dismiss was completed on February 9, 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 former Broadmark stockholders in the

Superior Court for King County, Washington (the “Broadmark State Court 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 State Court 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.). On June 20, 2025, the court consolidated the Broadmark State Court

Actions under the caption In re Ready Capital Corporation Securities Litigation, No. 25-2-14038-5 SEA (Wash. Super.

Ct. King Cnty.) (as consolidated, the “Broadmark State Court Litigation”). The Broadmark State Court Litigation alleges

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

August 19, 2025, the plaintiffs filed a consolidated complaint, which the defendants subsequently moved to dismiss on

October 20, 2025. On February 2, 2026, the defendants moved to stay the Broadmark State Court Litigation pending

resolution of the Broadmark Federal Court Litigation. On February 19, 2026, the motions to dismiss and stay were

denied. Discovery has since commenced in the Broadmark State Court Litigation. On May 1, 2026, the plaintiffs in the

Broadmark State Court Litigation and the lead plaintiff in the Broadmark Federal Court Litigation (defined below)

jointly moved for class certification and to be appointed co-class representatives in the Broadmark State Court Litigation.

On July 1, 2026, the defendants filed their opposition to the class certification motion. Briefing on the plaintiffs’ class

certification motion is expected to be completed by September 2026.

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 former Broadmark stockholder in the United States District Court for the Western District

of Washington (the “Broadmark Federal Court Litigation”). Broadmark and certain of its former directors and officers

were also named as defendants. The Broadmark Federal Court Litigation is captioned Grant v. Broadmark Realty Capital

Inc., et al., No. 2:25-cv-1013 (W.D. Wash.). On October 15, 2025, the court entered an order appointing lead plaintiff

and lead counsel. On November 25, 2025, the lead plaintiff filed an amended complaint asserting that the defendants

violated Sections 14(a) and 20(a) of the Exchange Act and Section 11, 12(a)(2), and 15 of the Securities Act by issuing

false and misleading statements and omissions in connection with the Broadmark Merger regarding the performance of

the Company’s loan portfolio and related matters. The amended complaint seeks compensatory and rescissory damages,

as well as attorneys’ fees and litigation expenses. On January 12, 2026, the defendants moved to dismiss the amended

complaint. Briefing on the defendants’ motion to dismiss was completed on March 4, 2026. On January 8, 2026, the

defendants moved to transfer the Broadmark Federal Court Litigation to the U.S. District Court for the Southern District

of New York, where the Exchange Act Litigation is pending. Briefing on the defendants’ motion to transfer was

completed on February 5,2026. On May 1, 2026, the lead plaintiff in the Broadmark Federal Court Litigation and the

plaintiffs in the Broadmark State Court Litigation jointly moved for class certification and to be appointed co-class

representatives in the Broadmark State Court Litigation. On June 1, 2026, the parties filed a stipulated motion to stay the

Broadmark Federal Court Litigation pending final adjudication of the Broadmark State Court Litigation. The parties’

motion to stay was granted on June 3, 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 Federal Court Litigationand 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 Federal Court

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 Federal Court Litigation. The defendants intend to vigorously defend against the

Broadmark State Court Litigation, the Broadmark Federal Court 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 (collectively the “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 complete and summary judgment motions have been filed by all Defendants in an attempt to dispose of the

litigation. The court will issue a forthcoming order setting a trial date, likely after the summary judgment motions are

decided. The UDF Defendants and the Company intend to vigorously defend against the Megatel Action.

Item 1A. Risk Factors