EOE Eaton Vance Credit Opportunities Fund

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Description of Tousa Litigation

This adversary proceeding was filed in the United States Bankruptcy Court, Southern District of Florida. The Complaint (as amended three times) named among others, Eaton Vance Credit Opportunities Fund, as a defendant (the Eaton Vance Defendant). The Official Committee of Unsecured Creditors (Committee) of TOUSA, Inc. (TOUSA) sought to avoid certain pre-petition transfers that grew out of certain secured debt obligations which allegedly were fraudulent and preferential and “forced” certain of TOUSA’s subsidiaries to take on hundreds of millions of dollars of debt so that it could repay a debt for which those subsidiaries were not liable. According to the Complaint, these subsidiaries either were already insolvent or thereby became insolvent at the time it took on such debt. The Eaton Vance defendant was part of a group of lenders under the senior credit agreement referred to as the “Senior Transeastern Lenders.” The Eaton Vance defendant sold the TOUSA/Transeastern revolver and term senior loans in June 2007 to another named defendant (Deutsche Bank Trust Company Americas) prior to the pay-out in July 2007; however, the sales did not settle until September 2007. Eaton Vance Management, the Eaton Vance Defendant’s investment adviser, has sent two separate demand letters to Deutsche Bank on behalf of the Eaton Vance defendant requesting reimbursement of any final judgment entered against the Eaton Vance defendant and all related interest and charges incurred defending this matter.

The Eaton Vance defendant is part of the Senior Transeastern Lenders Group of defendants represented by Milbank in New York. Trial proceedings concluded on August 28, 2009 after the Court allowed additional testimony of two of the Committee’s experts to continue an extra day beyond the originally scheduled close of the trial. Findings of Fact and Conclusions of Law were filed on September 4, 2009. On October 13, 2009, Bankruptcy Judge John K. Olson issued his decision and ordered the Senior Transeastern Lenders to disgorge $403 million in principal, plus prejudgment interest (at a rate of 9%), on or before October 23, 2009. The Eaton Vance defendant, however, was specifically excluded from the impact of this judgment - on page 163 of his 182 page opinion, Judge Olsen concluded that the monies transferred to Deutsche Bank are directly recoverable from Deutsche Bank. The Senior Transeastern Lenders filed a notice of appeal of Judge Olson’s decision to the District Court on October 20, 2009. The deadline for posting bonds was recently extended by the District Court to December 22, 2009. Given the language of Judge Olson’s Order described above, the Eaton Vance defendant has withdrawn from the Senior Transeastern Lenders Group

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represented by Milbank effective close of business November 30, 2009. After consulting with outside counsel, the Eaton Vance defendant does not intend to post a bond for the amount of the judgment attributable to the loans transferred to Deutsche Bank. In an abundance of caution, however, the Eaton Vance defendant has retained Faegre & Benson LLP, and local Florida counsel, to represent its interests going forward and to file a fairly simple “me too” appeal to both preserve their appellate rights and to delay the possibility of an execution of a final judgment by the Committee, without the need to continue to incur ongoing substantial monthly legal fees as part of the Senior Transeastern Lenders Group represented by Milbank. ¹ Deutsche Bank posted a surety bond on behalf of the Eaton Vance defendant on December 22, 2009. On January 14, 2010, the Senior Transeastern Lenders filed an unopposed motion to stay the TOUSA appeal or extend the time for filing briefs, in light of the potential transfer or consolidation of the case with related appeals. According to the motion, initial briefs are currently due on Jan. 19, 2010. On January 29, 2010, the Committee filed a motion to stay the appeal (or briefing of the appeal) until the bankruptcy adversary proceeding is concluded, or alternatively to dismiss the appeal as interlocutory. Although there is a stay currently in place, the stay requested by the Committee would differ from the existing stay because it would remain in place until the bankruptcy adversary proceeding fully concludes. This motion, like the prior motion for a stay, should affect the proceeding as a whole. On March 5, 2010, the Committee filed another motion requesting the Court to consolidate all appeals. Judge Gold held oral argument on the motion to consolidate and the motion to stay/dismiss on March 19, 2010. The motion to stay/dismiss was denied and the motion to consolidate was taken under advisement but was not granted. The Court set a merits briefing and argument schedule with the opening brief due on June 1, reply brief due on September 3 and oral argument on October 29, 2010.

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      The undersigned states that (i) she has executed this Form N-8F application for an order under section 8(f) of the Investment Company Act of 1940 on behalf of Eaton Vance Credit Opportunities Fund, (ii) she is the Assistant Secretary of Eaton Vance Credit Opportunities Fund, and (iii) all actions by shareholders, directors, and any other body necessary to authorize the undersigned to execute and file this Form N-8F application have been taken. The undersigned states that the facts set forth in this Form N-8F application are true to the best of his knowledge, information and belief.