Form 4: Rocket Companies Completes Up-C Structure Collapse, Reshaping Insider Ownership and Share Classes

Rocket Companies, Inc. has completed the collapse of its 'Up-C' corporate structure, resulting in significant changes to Daniel Gilbert's beneficial ownership and the introduction of new Class L common stock with specific transfer and conversion terms.

Summary

• Rocket Companies, Inc. completed the collapse of its 'Up-C' structure on June 30, 2025, as per a Transaction Agreement with Rock Holdings Inc. (RHI), Daniel Gilbert, and other entities.
• As part of the Up-C Collapse, RHI shareholders received 56.54 newly issued shares of Rocket Class L common stock (half Class L-1 and half Class L-2) for each RHI Share.
• Daniel Gilbert contributed and transferred his Class D common stock and corresponding non-voting common interest units of Rocket Limited Partnership (Rocket LP) to Rocket, receiving Class L Common Stock on a one-to-one basis.
• Following the transaction, Daniel Gilbert directly acquired 498,416,138 shares of Class L-1 common stock and 498,416,138 shares of Class L-2 common stock.
• Indirectly, through Daniel Gilbert Trust #1, he acquired 70,107,640 shares of Class L-1 common stock and 70,107,640 shares of Class L-2 common stock.
• Daniel Gilbert disposed of 1,101,822 shares of Class D common stock directly, and 1,846,977,661 shares indirectly through RHI, and 800,000 shares indirectly through a wholly-owned subsidiary of RHI, resulting in zero Class D common stock beneficially owned.
• Corresponding non-voting common interest units of Rocket LP were also disposed of as part of the exchange.
• The Exchange Agreement, which governed the exchange of Holdings Units for Class B or Class A common stock or cash, was terminated as part of the Up-C Collapse.
• RHI and its subsidiary no longer hold any securities of Rocket Companies, Inc. following the Up-C Collapse.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as the 'Up-C' collapse simplifies the corporate structure and provides a clear path for future liquidity of the new share classes, which are generally viewed favorably by the market, despite initial transfer restrictions.

Positives

• The collapse of the 'Up-C' structure simplifies Rocket Companies' corporate and ownership structure, which can improve transparency and governance.
• The conversion mechanism for Class L shares to Class A common stock provides a clear path for future liquidity for the holders of these new share classes.

Negatives

• Class L-1 common stock is prohibited from transfer prior to June 30, 2026, limiting immediate liquidity for these shares.
• Class L-2 common stock is prohibited from transfer prior to June 30, 2027, imposing a longer restriction on liquidity for these shares.

Risks

• Holders of Class L-1 common stock face liquidity risk due to transfer restrictions until June 30, 2026.
• Holders of Class L-2 common stock face liquidity risk due to transfer restrictions until June 30, 2027.

Future Outlook

Class L-1 common stock will be convertible into Class A common stock after June 30, 2026, and Class L-2 common stock will be convertible after June 30, 2027. All Class L common stock will automatically convert to Class A common stock upon the later of June 30, 2027, or when Class L common stock represents less than 79% of the total voting power of Rocket common stock.

Management Comments

• Rocket Companies, Inc. completed the collapse of its 'Up-C' structure pursuant to the Transaction Agreement.
• Daniel Gilbert contributed and transferred his Class D common stock and corresponding non-voting common interest units of Rocket LP to Rocket, receiving Class L Common Stock on a one-to-one basis.
• The Exchange Agreement, dated as of August 5, 2020, was terminated as part of the Up-C Collapse.

Industry Context

The collapse of an 'Up-C' structure is a common corporate action undertaken by companies that initially went public with such a structure (often to facilitate pre-IPO owner liquidity and tax efficiency). This move typically simplifies the corporate structure, potentially making it more appealing to a broader range of institutional investors over time.

Comparison to Industry Standards

• The 'Up-C' collapse is a standard corporate restructuring strategy employed by companies, particularly those that went public with a partnership or LLC structure, to simplify their capital structure and governance.
• Similar restructurings have been observed across various industries, aiming to streamline operations and potentially enhance market appeal by converting complex multi-class share structures into more conventional forms, often leading to increased liquidity for former partnership unit holders.

Corporate Governance

Related Party Transactions

• The 'Up-C' collapse involved transactions between Rocket Companies, Inc., Rock Holdings Inc. (RHI), and Daniel Gilbert, who is a Director, 10% Owner, and was the majority shareholder of RHI. This constitutes a significant related-party transaction aimed at restructuring the ownership and governance of the company.

Stakeholder Impact

• Shareholders: Existing RHI shareholders and Daniel Gilbert (as a Class D common stock holder) directly experienced a change in their holdings, exchanging their previous shares/units for new Class L common stock.
• Future Class A Shareholders: The eventual conversion of Class L shares into Class A shares will lead to an increase in the outstanding Class A share count, potentially impacting per-share metrics and voting power distribution over time.
• Investors: The simplification of the corporate structure may make Rocket Companies more attractive to a broader range of institutional investors who prefer simpler, more transparent capital structures.

Next Steps

• Conversion of Class L-1 common stock into Class A common stock after June 30, 2026.
• Conversion of Class L-2 common stock into Class A common stock after June 30, 2027.
• Automatic conversion of all Class L common stock to Class A common stock upon the later of June 30, 2027, or when Class L common stock represents less than 79% of total voting power.

Key Dates

Keywords

Rocket Companies, RKT, Daniel Gilbert, Up-C structure, corporate restructuring, beneficial ownership, Class L common stock, Class D common stock, share conversion, SEC Form 4, insider transaction