Ready Capital (RC) Lawsuit Update: Securities Class Action [April 5, 2025]

Introduction  

Ready Capital Corporation is a real estate finance company. In November 2024, the Company released the Company's financial results which showed “Record” originations in the quarter. The Company also touted its strong debt portfolio, including a conservative debt leverage. In particular, Ready touted the strength its Commercial Real Estate (CRE) portfolio.    

Investors were stunned, then, in March 2025, when the Company wrote down $284 million in bad debt, particularly from CRE loans. This write-down resulted in an annual loss per-share of $2.52 for investors. It also substantially reduced the overall value of the Company’s real estate portfolio. The Company announced it needed to take “decisive actions” to stabilize its balance sheets. 

Shocked investors reacted negatively to this news and Ready Capital common stock plunged 26.8% overnight. 

Ready Capital Corp. (RC) Securities Fraud Class Action Case Details  

Quinn v. Ready Capital Corp., et al 1:25-cv-01883  

U.S. District Court, Southern District of New York  

Filed on March 6, 2025.     

Ready Capital Corp. (RC) Company Profile  

Ready Capital Corporation is a real estate company. It originates, acquires, finances, and services lower-to-middle market (“LLM”) commercial real estate (“CRE”) loans, small business loans, residential mortgage loans, and other real-estate investments.     

Ready Capital Corp. (RC) Lawsuit Class Period 

The class period for this lawsuit is November 7, 2024 to March 2, 2025, inclusive.    

Ready Capital Corp. (RC) Lawsuit Allegations  

On November 7, 2024, RC issued a press release announcing its Q3-24 financial results. The Company touted, in part, a “net book value of $12.59 per share,” in addition to “Record Small Business Lending loan originations.” Ready Capital’s top executives highlighted the Company’s strong debt portfolio. During the associated earnings call, the Company’s CEO highlighted Ready’s “total leverage of 3.3 times is below [the Company’s] long-term target of four times.”   

In particular, Ready highlighted the strength of its CRE portfolio. During the earnings call, Ready’s CEO stated the “CRE portfolio is showing stabilizing credit metrics” and that “Ready Capital is well positioned to capitalized on the tailwinds of in the CRE market.”  

Further, on November 25, 2024, the Company gave an investor presentation. During the presentation, Ready touted its strong market position due to its “[c]onservative approach to credit” and “financial flexibility” due to its 3.3 times leverage. Further, the presentation stated the Company’s financial made “allowance for credit allowances” and “are reviewed quarterly considering credit quality indicators.”  

Plaintiffs allege these statements were false, misleading, and deceptive. Specifically, Plaintiffs allege Ready had many non-performing loans in its CRE portfolio which were non-collectable. As a result, Ready had to stabilize its CRE portfolio, which would result in a write-down of bad debt, which adversely affected Ready’s leveraging and financial results.  

The Truth Emerges  

On March 3, 2025, Ready issued a press release announcing dire Q4-24 and FY-24 financial results. Investors lost $1.80 per share for the quarter and investors lost $2.52 per share for the full year. Further, these actions reduced the Company’s book value per share to $10.61. Ready stated it had to take “decisive actions to stabilize” its “balance sheet going forward by fully reserving all of our non-performing loans in our CRE portfolio," suggesting it held many problem loans on its books.  This meant taking a $284 million “Current Expected Credit Loss.”   

This action draws into question whether the 3.3 times leverage value was accurate or appropriate.  

Market Reaction  

Investors reacted negatively to this news. Ready’s stock price plummeted 26.8% overnight.   

Next Steps  

• Submissions for lead plaintiff are due May 5, 2025    

• The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due.    

• The Court will then consider a motion for class certification.     

• The Court may later consider a Motion to Dismiss.