Business

Dave's Hot Chicken operator files for Chapter 11 bankruptcy

Restaurant franchisee files for Chapter 11 bankruptcy and countersues its lender for torpedoing a potential sale. ©Image Credit: Facebook / Dave's Hot Chicken

Another restaurant chain is struggling in the US and has filed for Chapter 11 bankruptcy. Restaurants struggling in a tough market have become common, as an independent Dave's Hot Chicken franchisee becomes the latest operator to face financial challenges.

Franchisee files for bankruptcy

TIG Reaper has been a Dave's Hot Chicken franchisee since 2024 and owns seven locations, with three in late-stage development across Pennsylvania, Delaware and New Jersey.

TIG Reaper filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the Eastern District of Pennsylvania.

The court filing lists total assets and liabilities between $10 million and $50 million. Bank Midwest is the largest creditor listed, with $8.8 million owing.

In August 2024, the bank extended TIG Reaper's term loan and a drawdown line of credit. In November 2025, the bank again increased the drawdown.

Chapter 11 filing goes deeper than just money woes

The Chapter 11 filing isn't exactly cut and dry. The franchisee is accusing Bank Midwest of interfering with a $30 million sale opportunity.

On Sept. 8, Bank Midwest sued TIG Reaper for $8.84 million, plus penalties and fees. It also asked a receiver to take control and then sell the restaurant assets.

TIG Reaper argues it made a payment on July 20 of almost $104,000 and is disputing many of the nonmonetary default claims.

It's a classic he-said, she-said, except it deals with millions of dollars and likely paper trails.

Franchisee accuses bank of torpedoing potential sale

While all of the payment issues were happening with the bank, the franchisee is claiming it was pursuing a sale of the business worth approximately $30 million.

TIG Reaper is placing the blame on the bank for causing the sale to fall through and forcing the buyer to reduce its offer.

Along with the Chapter 11 filing, TIG Reaper has also countersued Bank Midwest for breach of contract and more. It is seeking at least $14 million in damages.

It could be a drawn-out battle

With all the back-and-forth legal filings, let this be your push to get yourself some Dave's Hot Chicken before those locations potentially close.

Source: NRN

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