Saba Capital Master Fund, Ltd. v. BlackRock
Credit Allocation Income Trust et al., C.A. No.
2019-0416-MTZ (Del. Ch.), No. 297, 2019 (Del.)
On June 4, 2019, Saba Capital Master Fund, Ltd.
("Saba"), a shareholder of BlackRock Credit
Allocation Income Trust ("BTZ"), filed a purported
class action lawsuit in the Court of Chancery of the
State of Delaware against BTZ, its investment
adviser, BlackRock Advisors, LLC ("BlackRock"),
and each of the members of BTZ's board of
directors (the "Board").  On June 12, 2019, Saba
filed an amended complaint (the "Complaint").
Saba's Complaint alleges, among other things, that:
(i) Saba gave notice of its intention to nominate four
individuals to BTZ's Board; (ii) the Board notified
Saba that it missed a deadline to provide
information set forth in BTZ's bylaws, and
therefore Saba's nominees were ineligible for
election to the Board; and (iii) votes for Saba's
nominees would not be counted at the July 8, 2019
annual meeting of BTZ shareholders.  The
Complaint further argues that the deadline in the
bylaws did not apply and therefore votes for Saba's
nominees were eligible for election to the Board.  In
addition, the Complaint challenges a provision in
BTZ's declaration of trust under which the
applicable voting standard for contested director
elections is a majority vote of outstanding shares.
Based on these and other allegations, Saba's
Complaint asserts four counts against BTZ:
(1) breach of BTZ's declaration of trust for
imposing a majority vote standard in a contested
election; (2) breach of fiduciary duties to
shareholders of BTZ for adopting the majority vote
standard; (3) breach of BTZ's bylaws; and
(4) breach of fiduciary duty to shareholders of BTZ
for refusing to recognize Saba's nominees as valid.
The Complaint seeks declaratory and injunctive
relief and an award of Plaintiff's costs of the
proceedings.  The alleged class includes Saba and
"all other similarly situated holders of common
shares of . . . BTZ, their legal representatives, heirs,
successors, transferees, and assigns."  On June 9,
2019, Saba moved for a preliminary injunction
requiring defendants to count votes for Saba's
nominees at BTZ's 2019 annual meeting.  On June
27, 2019, the Delaware Court of Chancery issued a
memorandum opinion granting Saba's motion on
the ground that Defendants breached BTZ's bylaws.
On July 2, 2019, the Delaware court entered a
partial final judgment directing, among other things,
that "Saba's nominees are validly nominated for
election to the Board[] of [BTZ] at the 2019 annual
meeting," and BTZ is enjoined from applying its
bylaws to invalidate Saba's nominations, and "shall
count votes for those nominees for election to the
Board[] of [BTZ]" at the 2019 annual meeting.
BTZ has appealed the Delaware Court of
Chancery's decision to the Supreme Court of the
State of Delaware
BTZ intends to vigorously defend itself against the
Complaint.