Dave’s Hot Chicken Franchisee Files Chapter 11: What Restaurant Owners With Merchant Cash Advances Should Know

CredibleLaw Legal News | Published September 28, 2026

The short answer TIG Reaper LLC and three affiliates filed for Chapter 11 bankruptcy on September 21, 2026. TIG Reaper is a Pennsylvania-based franchisee that runs seven Dave’s Hot Chicken restaurants in Pennsylvania, New Jersey and Delaware. The case was filed in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania. The central dispute is about $8.8 million owed to Bank Midwest. The filing also lists about $305,000 in merchant cash advances from three lenders. The restaurants remain open, and Dave’s Hot Chicken corporate is not a party to the case.

The Dave’s Hot Chicken bankruptcy filed last week is, at its core, a fight between a franchise operator and its bank. There is a disputed default, a request for a receiver, a countersuit over a $30 million sale that fell apart, and a small layer of merchant cash advances underneath it all.

That last detail is the one many restaurant owners will recognize. Merchant cash advances (MCAs) have shown up in several restaurant franchisee bankruptcies in the past year, including cases involving Farmer Boys, Domino’s and Del Taco operators. Whatever happens with this operator and its bank, the case is a useful look at how bank debt, MCA debt and a bankruptcy filing interact.

CredibleLaw is a legal referral network, not a law firm. This article reports on public court filings and published news coverage. The allegations described below have not been decided by any court, and nothing here is legal advice for a particular business.

What Happened in the Dave’s Hot Chicken Franchisee Bankruptcy

The debtors are TIG Reaper LLC and three affiliates: Reaper Time PA 1 LLC, Reaper Time PA 2 LLC and Reaper Time NJ 1 LLC. All four are subsidiaries of The Integritty Group, a multi-brand franchise operator known as TIG. The group’s Qdoba, Checkers and Greene Turtle businesses are not part of the filing, according to Franchise Times.

Detail	What the filing and coverage show
Debtors	TIG Reaper LLC, Reaper Time PA 1 LLC, Reaper Time PA 2 LLC, Reaper Time NJ 1 LLC
Date filed	September 21, 2026
Court	U.S. Bankruptcy Court, Eastern District of Pennsylvania (Case No. 26-13937)
Restaurants	Seven open Dave’s Hot Chicken locations in PA, NJ and DE, plus three in late-stage development
Assets and liabilities	Each listed in the $10 million to $50 million range, with 100 to 199 creditors
Largest creditor	Bank Midwest, about $8.8 million
Merchant cash advances	About $305,000 from three lenders
Funding during the case	A $200,000 debtor-in-possession loan from the group’s principals
Franchisor	Dave’s Hot Chicken is not a party; the restaurants remain open

Sources: Franchise Times, Nation’s Restaurant News and the Bondoro filing alert, all linked below.

Bank Midwest, a division of NBH Bank, made TIG Reaper a $1.65 million term loan and a $5 million drawdown line of credit in August 2024, Nation’s Restaurant News reported. In November 2025 the bank increased the drawdown facility to $8.35 million and expanded its collateral to cover 10 restaurants.

On September 8, 2026, the bank sued TIG Reaper in federal court. It sought about $8.84 million plus penalties and fees, and asked for a receiver to take control of and sell restaurant assets. TIG Reaper says it made a payment of nearly $104,000 on July 20 and disputes several non-monetary defaults.

The background matters. The bank separately sued TIG’s Qdoba affiliates over a $20 million loan covering 41 Qdoba restaurants, and those parties agreed to a receiver. In the bankruptcy filing, TIG says the bank is using the Qdoba receivership as a basis for a receiver on the Dave’s side too, even though, TIG says, the Dave’s entities are current and not in payment default.

The Countersuit Against Bank Midwest

On the same day it filed for bankruptcy, TIG Reaper sued Bank Midwest in the bankruptcy court. The complaint alleges breach of contract, among other claims, and seeks at least $14 million in damages.

The core allegation involves a sale. TIG says it was marketing its Dave’s Hot Chicken business with an offer of about $30 million, which it describes as more than enough to retire the bank debt. TIG alleges the bank’s default declarations undermined that process, and that the prospective buyer cut its offer in half.

TIG is also asking the court to declare two things. The first is that its Dave’s entities are not responsible for the Qdoba debts. The second is that Dave’s collateral cannot be used to satisfy them. TIG says the Dave’s entities did not guarantee the Qdoba loans and that the two loan groups were not cross-collateralized.

These are allegations in a complaint. The bank has its own account of the defaults in its lawsuit, and none of the competing claims has been decided.

Where Merchant Cash Advances Fit Into This Case

The MCAs are a small part of this debtor’s balance sheet. About $305,000 in merchant cash advances is less than 4 percent of the roughly $8.8 million claimed by Bank Midwest alone. The published coverage does not identify the MCAs as the cause of the filing. Reading this case as an MCA collapse would get it wrong.

They are still worth understanding, because MCA debt behaves differently from bank debt. A merchant cash advance is usually structured as a purchase of a share of a business’s future receipts rather than a loan. The funder advances a lump sum and collects a larger purchased amount through fixed daily or weekly ACH debits from the operating account.

Bank payments are typically monthly. MCA debits come out every business day, often before payroll, food costs and rent are covered.

“It creates an incredible liquidity crunch for these smaller operators.”

— Bankruptcy attorney Alex Mattera, a partner at Pierce Atwood, quoted by Franchise Times in April 2026

Speaking to Franchise Times earlier this year, Mattera said MCAs give operators quick access to cash but carry heavy fees. He described the Farmer Boys case below as one where the advances bought time “at the expense of no future.”

A Pattern Across Restaurant Franchisee Bankruptcies

Franchise Times has reported on several restaurant franchisee filings in which merchant cash advances figured in the court papers:

Brand	Franchisee and filing	What the filing said about MCAs
Farmer Boys	Geddo Corporation, 12 units in California and Arizona; Chapter 11, late March 2026	Borrowed $5.2 million from 40 MCA lenders to build two Arizona restaurants and had repaid nearly $5.1 million; court documents attribute its struggles to the advances
Domino’s	North County Pizza, California	Described MCA lenders recording UCC liens and one lender sending notices telling customers to pay the lender directly, cutting off the debtor’s cash flow
Del Taco	Matadoor Restaurant Group; Chapter 11, 2025	Cited 10 merchant cash advances from nine creditors totaling $2.7 million
Dave’s Hot Chicken	TIG Reaper LLC and affiliates; Chapter 11, September 21, 2026	About $305,000 in MCAs from three lenders, alongside about $8.8 million in disputed bank debt

Sources: Franchise Times (April 24, 2026 and September 22, 2026) and Nation’s Restaurant News (September 25, 2026).

Restaurants share traits that make MCAs easy to sign and hard to carry. Daily card receipts make daily debits simple to set up. Margins are thin. Revenue swings with seasons and traffic. New locations need build-out cash before they earn anything, which is what Geddo used its advances for.

When a slow stretch meets a fixed daily withdrawal, many operators take a second advance to cover the first. This is called stacking. For a wider view of how small business filings are trending, see our coverage of small business bankruptcy filings in August 2026.

What Chapter 11 Does to Merchant Cash Advance Collections

Chapter 11 lets a business keep operating while it restructures. The business generally stays in control as a “debtor in possession,” as the U.S. Courts explain. For a restaurant carrying MCAs, five parts of the process matter most.

1. The automatic stay

Filing a petition triggers the automatic stay under 11 U.S.C. § 362. The stay generally halts efforts to collect debts that arose before the filing: lawsuits, judgment enforcement, bank levies and, as a rule, continued ACH withdrawals against the debtor.

In practice, counsel usually has to notify each funder, the bank and any payment processor. A creditor can also ask the court for relief from the stay. Our guide to MCA bankruptcy options covers these mechanics in detail.

2. Cash collateral and competing liens

Most MCA agreements come with a UCC-1 filing claiming an interest in receivables, and sometimes in all business assets. In bankruptcy, a business generally cannot use cash that a creditor holds a security interest in without that creditor’s consent or a court order under 11 U.S.C. § 363.

A court order may require the business to provide “adequate protection.” That makes lien priority important. Restaurant groups with bank financing often have a bank lien that was filed first, with MCA liens behind it. The bankruptcy case is where validity, perfection and priority get tested. See MCA UCC lien removal for how these filings work outside bankruptcy.

3. The “true sale” fight

Funders frequently argue that the receivables they “purchased” never belonged to the business, so they sit outside the bankruptcy estate. Whether that argument holds depends on how the agreement actually works. That question has produced some of the most important MCA rulings of the past year (see the next section).

4. Payments made before the filing

A debtor in possession has “avoiding powers.” These can let it recover certain payments made to creditors in the 90 days before filing under 11 U.S.C. § 547, along with certain transfers under § 548 and state law.

Whether MCA remittances can be clawed back depends on how the agreement is classified and on the defenses available. This is fact-specific, and it is one reason the loan-versus-sale question carries so much weight in bankruptcy.

5. Personal guarantees

Nearly every MCA agreement includes an owner’s personal guarantee. The automatic stay protects the business that filed, not an owner who did not. A funder may keep pursuing a guarantor unless the owner files personally or the court extends protection.

The Recharacterization Trend: When a Court Treats an MCA as a Loan

On July 27, 2026, Judge David S. Jones of the U.S. Bankruptcy Court for the Southern District of New York ruled in In re Kossoff PLLC that 19 MCA agreements were loans under New York law, according to an Eversheds Sutherland analysis.

The funder had advanced $10.88 million against $14.88 million in required repayment. About $8 million had been repaid before the bankruptcy. The court found three problems with the agreements:

• Reconciliation was illusory. Adjustments were at the funder’s discretion, applied only going forward, and came with no refund of past over-collection.
• The term was effectively fixed. Daily ACH sweeps of $2,190.48 against a set repayment amount produced a calculable 189-day repayment period.
• The bankruptcy carve-out was largely theoretical. Acceleration, blanket security interests, a personal guaranty and a confession of judgment were incompatible with a true sale.

The same judge reached a similar result in In re J.P.R. Mechanical in May 2025. Kossoff went further because the funder actively contested the record and still lost. State courts have also weighed in: New York’s Appellate Division affirmed the usury and fraud findings in the Richmond Capital case, covered in our analysis of the modified Richmond Capital judgment.

Two cautions apply. Kossoff is a Southern District of New York bankruptcy decision. It is persuasive but not binding on the Eastern District of Pennsylvania, where the TIG Reaper case sits. And other courts have upheld some MCA agreements as true sales. Every outcome turns on the specific contract and how the funder administered it. Our overview of MCA legal defenses walks through the factors courts apply.

Subchapter V and the Debt Limit

Subchapter V is a faster, less expensive form of Chapter 11 for smaller businesses. As of this writing, it is available only to debtors with no more than $3,424,000 in qualifying debt, per the U.S. Trustee Program.

With reported liabilities in the $10 million to $50 million range, the TIG Reaper debtors are well above that line. That is typical of multi-unit operators with bank financing.

Congress may soon restore a $7.5 million limit. The Senate passed S. 3977 on August 3, 2026, and the House passed H.R. 7730 on September 16. Because the bills have different short titles, one chamber still has to pass the other’s version before it can be signed. Until then, the lower limit applies. The new limit would reach only cases filed after enactment. For single-location and small multi-unit restaurants, that gap matters. See what the House vote means for businesses with MCA debt.

What Restaurant Owners Carrying MCAs Can Take From This Case

Most readers are not running seven franchise units with an $8 million credit line. The same pressure points still show up at every size:

• Map every financing position. List your bank loans, equipment financing and each MCA, with the daily or weekly debit and the date each UCC-1 was filed. Priority questions start there.
• Read the default triggers. TIG’s fight turns on whether one group’s default could reach another group’s collateral. MCA agreements often define default broadly: new financing, a change of bank or processor, a sale of the business, or a change in ownership.
• Talk to counsel before marketing the business. A sale process can itself trip a default. Knowing that in advance can help protect the sale.
• Measure the debit burden against revenue. If combined daily withdrawals are eating a growing share of deposits, that trend is worth addressing early rather than with another advance. Our MCA calculators can help frame the math.
• Document reconciliation requests. If your agreement allows payments to be adjusted to actual revenue, put requests in writing and keep the responses. Reconciliation history drove the Kossoff result.
• Compare settlement, defense and bankruptcy side by side. A merchant cash advance settlement may resolve one funder. Bankruptcy may make more sense when several are collecting at once or when bank debt is also in default.
• Treat the personal guarantee as its own issue. Whatever the business does, the owner’s exposure needs separate analysis.

If a funder has already sued, frozen an account or pulled more than the agreement allows, those are separate, time-sensitive problems. See our guides on MCA lawsuit defense, unfreezing a business bank account and stopping daily MCA withdrawals. Pennsylvania operators can find state-specific information on our Philadelphia MCA defense page.

Talk through your options CredibleLaw can connect you with an independent attorney who handles merchant cash advance disputes and business bankruptcy. The attorney can review your agreements, liens and guarantees and explain the options that fit your situation. Call 888-201-0441 or request a free case review.

Frequently Asked Questions

Is Dave’s Hot Chicken going bankrupt?

No. The filing involves one independently owned franchisee, TIG Reaper LLC, and three affiliates. Dave’s Hot Chicken corporate is not a party. The company said the situation does not involve the broader franchise system and that the affected restaurants remain open.

Which Dave’s Hot Chicken franchisee filed for bankruptcy?

TIG Reaper LLC, based in Langhorne, Pennsylvania, filed with affiliates Reaper Time PA 1 LLC, Reaper Time PA 2 LLC and Reaper Time NJ 1 LLC. They are subsidiaries of The Integritty Group, which operates seven Dave’s Hot Chicken restaurants in Pennsylvania, New Jersey and Delaware.

Why did the Dave’s Hot Chicken franchisee file Chapter 11?

The filing followed a dispute with Bank Midwest. The bank sued on September 8, 2026, seeking about $8.84 million and a receiver. TIG Reaper disputes the defaults and has countersued, alleging the bank interfered with a roughly $30 million sale of the business. About $305,000 in merchant cash advances is also part of the debt picture.

How much merchant cash advance debt did TIG Reaper have?

About $305,000 from three MCA lenders, according to the bankruptcy filing as reported by Franchise Times and Nation’s Restaurant News. That is a small share of the case compared with roughly $8.8 million claimed by Bank Midwest.

Does Chapter 11 stop merchant cash advance daily withdrawals?

Generally, yes. Filing triggers the automatic stay under 11 U.S.C. § 362, which halts most efforts to collect debts that arose before the filing, including ACH debits against the debtor. Counsel usually needs to notify funders and the bank. Funders can ask the court for relief, and some argue the receivables they purchased are not the debtor’s property.

Can a merchant cash advance be treated as a loan in bankruptcy?

Sometimes. In In re Kossoff PLLC (Bankr. S.D.N.Y. July 27, 2026), the court held that 19 MCA agreements were loans under New York law because reconciliation was illusory, the term was effectively fixed and the funder’s remedies were incompatible with a true sale. Other courts have reached different results on different contracts, so the answer depends on the agreement.

Does a business bankruptcy protect the owner’s personal guarantee?

Not automatically. The automatic stay protects the business that filed. A funder may continue to pursue an owner who personally guaranteed the advance unless the owner files personally or the court extends protection.

Can a restaurant with MCA debt use Subchapter V?

Only if its qualifying debt is at or below the current Subchapter V limit of $3,424,000. Legislation to restore a $7.5 million limit has passed both chambers under different short titles but is not yet law, and it would apply only to cases filed after enactment.

Can payments made to an MCA funder before bankruptcy be recovered?

Possibly. A debtor in possession or trustee can seek to recover certain payments made within 90 days before filing, and certain other transfers under federal and state law. When a court recharacterizes an MCA as a loan, as in Kossoff, it can open the door to those claims. Results depend heavily on the facts and available defenses.

Are other restaurant franchisees filing bankruptcy because of MCAs?

Several have cited them. A 12-unit Farmer Boys franchisee said it borrowed $5.2 million from 40 MCA lenders. A Domino’s franchisee described MCA liens and customer payment notices that cut off its cash flow. A Del Taco franchisee cited 10 advances totaling $2.7 million.

Related Resources

• MCA defense attorney overview
• MCA bankruptcy options
• Business bankruptcy
• Subchapter V debt limit: House vote
• Confession of judgment
• MCA lawsuits filed in the wrong county
• Merchant cash advance news

Sources

• Franchise Times: A Bank Alleged a Loan Default. Then a Dave’s Operator Declared Chapter 11 Bankruptcy and Filed a Countersuit (Sept. 22, 2026)
• Nation’s Restaurant News: 7-unit Dave’s Hot Chicken franchisee files Chapter 11 bankruptcy (Sept. 25, 2026)
• Bondoro: Filing Alert, TIG Reaper Chapter 11 (Case No. 26-13937)
• Franchise Times: Financial and Legal Troubles Are Pushing More Franchisees Into Bankruptcy (Apr. 24, 2026)
• United States Courts: Chapter 11 Bankruptcy Basics
• 11 U.S.C. § 362, Automatic stay (Cornell LII)
• U.S. Trustee Program: Subchapter V
• H.R. 7730, Bankruptcy Threshold Adjustment Act (GovInfo)
• Eversheds Sutherland analysis of In re Kossoff PLLC (via Glassberg, Pollak & Associates)

Legal disclaimer CredibleLaw is a legal referral network and resource, not a law firm, and does not provide legal advice. This article reports on a pending bankruptcy case and related litigation as of its publication date; the allegations described have not been decided and may change. Contacting CredibleLaw does not create an attorney-client relationship. Any attorney you are referred to is independent and will explain their own fees and terms.