As per Otzar Minhagei Chabad, which in turn quotes from R' Leibel Groner (the Lubavitcher Rebbe's personal secretary):
The context here is discussing the fact that while throughout pesach Chabad does not eat gebrochts (matza shruyah), on the eighth and last day of Pesach, they make a point to davka eat it.
When the last day of Pesach falls on Shabbos, there are those that have the custom to make "kneidlach" (matza balls) on the 7th day [whereas it would normally be made only on the eighth], obviously with special dishes, that are specifically set aside for this.
And so writes R' Leibel Groner about the custom of the Lubavitcher Rebbe z"iya:
"I remember that one year [when the last day of Pesach was Shabbos] it was not prepared [the "kneidlach"]. On the eighth night, when it wasn't brought to the table, the Rebbe asked the reason for it. It was answered that it was thought that when the last day of Pesach is Shabbos it wasn't appropriate to cook this. And the Rebbe was not pleased with this at all."
The sefer goes on to quote from several different tzaddikim that had the same custom.