The investors vs. Bed Bath & Beyond saga continues as Legion Partners Holdings, one in a group of activist investors that includes Cleveland’s Ancora Advisors LLC, has filed a lawsuit in the U.S. District Court, Southern District of New York against the embattled retailer alleging the company is subverting the rights of shareholders in the fight over the constitution of its board.

“We believe the board is trying to disenfranchise shareholders to gain an unfair advantage at the 2019 annual meeting, and we are highly disappointed that Bed Bath has resorted to these maneuvers,” the activist investors said in a collective statement.

The investors also allege that the company’s refusal to take steps to elect their director nominees will trigger certain change in control provisions that could lead to a rating downgrade. If that happened, the company would need to make a change of control offer at 101 percent of the principal amount of debt under the notes, plus accrued interest. They also allege that the board is at risk of breaching its duty of loyalty and care.

Bed Bath & Beyond issued a response, saying, with respect to the double-trigger, change-of-control provision in the company's indenture, that it never said that it would not approve the activist group's candidates, but rather that the board was considering the request.

“The company has repeatedly asked the activist group to allow the board or a committee of the board to interview their candidates to seek to ensure that any board action would be consistent with the board's fiduciary duty to its shareholders and the company's obligations under the indenture,” Bed Bath & Beyond said in a statement. “The activist group has refused to cooperate and has been unwilling to make their nominees available to be interviewed. To be clear, the activist group is asking the board to take actions that may expose the company and its shareholders to significant financial and operational risk.”

For their part, the investors say they’ve submitted some 1,500 pages of information to assess the qualification of the nominees.

Bed Bath & Beyond says it has attempted to settle with the activist group on several occasions, but has not received a direct response.

The drama began in late March when the same group of investors pressured Bed Bath & Beyond to replace both its CEO and its entire board. In April, the company made significant changes to its board of directors and began working to address the investors’ operational concerns.