A Dave’s Hot Chicken Franchisee Just Filed Bankruptcy, and It’s Blaming Its Bank for a Lost $30M Sale

A seven-unit Dave’s Hot Chicken franchisee has filed for Chapter 11 bankruptcy and is blaming its lender for disrupting a proposed sale that it says could have paid off the debt. According to Nation’s Restaurant News, TIG Reaper filed in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania on Sept. 21.

For diners, the immediate takeaway is simpler than the court fight. Dave’s Hot Chicken said the affected restaurants remain open, so families ordering takeout in parts of Pennsylvania, New Jersey, and Delaware should not see an immediate shutdown tied to the filing.

Bankruptcy filing centers on an $8.8 million dispute

Nation’s Restaurant News reported that TIG Reaper has operated as a Dave’s Hot Chicken franchisee since 2024. The company runs seven restaurants across Pennsylvania, New Jersey, and Delaware, and court papers also say three more locations are in late-stage development.

In the filing, TIG Reaper listed total assets and liabilities between $10 million and $50 million. Its largest listed creditor is Bank Midwest, at about $8.8 million. The franchisee also listed about $305,000 in merchant cash advances from three lenders, according to the report.

The financing at the center of the dispute dates to August 2024, when Bank Midwest extended a $1.65 million term loan and a $5 million drawdown line of credit to TIG Reaper. In November 2025, the bank increased that drawdown facility to $8.35 million and expanded the collateral package to cover 10 restaurants, Nation’s Restaurant News reported.

Bank Midwest later accelerated about $8.8 million in debt and sued TIG Reaper on Sept. 8, seeking roughly $8.84 million, plus penalties and fees, and asking for a receiver to take control of and sell restaurant assets. TIG Reaper said it made a nearly $104,000 payment on July 20 and disputes several nonmonetary defaults.

Restaurants stay open, but local markets are the ones to watch

Dave’s Hot Chicken told Nation’s Restaurant News that this is a dispute between TIG and its lender, not a broader problem for the chain. The company said the matter does not involve Dave’s Hot Chicken corporate or the wider franchise system, and it added that the affected restaurants remain open.

The source material confirms only the states involved, not a city-by-city list of the seven stores. TIG Reaper operates across Pennsylvania, New Jersey, and Delaware, but the company has not released a public list in the provided source of which specific cities are included.

That means the households most likely to notice any future change are the ones already eating at TIG-operated Dave’s locations in those three states. For everyone else, there is no indication in the source material that the bankruptcy filing affects the rest of the chain’s restaurants.

The filing lands during a period of rapid growth for Dave’s Hot Chicken. According to Technomic data cited by Nation’s Restaurant News, the chain’s 2025 sales grew 51% to $965.9 million, while unit count grew 52.3% to finish the year with just under 400 locations.

Franchise debt fights can shape what stays on the menu

TIG Reaper says the bank conflict cost it a chance to sell its Dave’s Hot Chicken business for approximately $30 million. According to the complaint described by Nation’s Restaurant News, that proposed sale would have been enough to repay the bank, but TIG alleges the bank’s default declarations interfered and caused a prospective buyer to cut its offer.

On the same day as the bankruptcy petitions, Sept. 21, TIG Reaper and three related entities countersued Bank Midwest, alleging breach of contract and other claims. The franchisee is seeking at least $14 million in damages and wants the bankruptcy court to declare that its Dave’s entities are not responsible for debts tied to separate Qdoba businesses.

That distinction matters because TIG is also a multi-brand franchisee. Nation’s Restaurant News reported that it recently defaulted on a $20 million loan from Bank Midwest tied to 41 Qdoba restaurants across Delaware, New Jersey, New York, Pennsylvania, and Florida.

TIG argues the Dave’s and Qdoba loans were separate and not cross-collateralized. For households, the practical effect is that the chicken chain’s counters are still serving customers today, while the bigger question, whether these seven restaurants stay under the same owner or change hands, will be decided in court.