Dave’s Hot Chicken Operator Files Chapter 11 and Countersues Bank After Loan Dispute

The useful part

Then a Dave's Operator Declared Chapter 11 Bankruptcy and Filed a Countersuit. Edit Article Add New Article Close You have permission to edit this article. Edit Close Share This Facebook Twitter WhatsApp LinkedIn SMS Email Close The Integritty Group alleges that Bank Midwest interfered with a prospective $30 million sale of its Dave's Hot Chicken restaurants.

How it works

• "We have built our businesses over many years through hard work and by honoring our commitments, and we intend to keep doing exactly that," Patel told Franchise Times over email on Monday.
• A Dave's Hot Chicken franchisee filed for bankruptcy, weeks after a bank sued an affiliate of the group for defaulting on a $20 million loan.
• TIG Reaper and three related groups filed for Chapter 11 bankruptcy in Pennsylvania September 21.
• These entities are subsidiaries of The Integritty Group, which also operates Qdoba, Checkers and The Greene Turtle Sports Bar and Grille.
• The group signed a 25-unit deal with electronics reseller PayMore and inked a three-unit agreement with Ford's Garage, a sit-down burger chain, last year.

What to take from it

"It creates an incredible liquidity crunch for these smaller operators," Mattera said. Because TIG agreed to the appointment of a receiver for its Qdoba subsidiaries, the bank is allegedly using that "as a basis for the appointment here despite the fact that Bank Midwest has been paid current and the Debtor Entities are not in any payment default," Patel wrote in the bankruptcy filing. There was a problem saving your notification.

Example or evidence

• The group operates sev en Dave's stores in New Jersey, Pennsylvania and Delaware, plus has three more in "late stages of development," according to court documents.
• 'One side of the story' Bank Midwest, a division of NBH Bank, sued The Integritty Group's Qdoba affiliates last month, claiming the operator failed to fill its debt repayment requirements for a $20 million...
• The parties agreed to the court appointing a receiver, which means a neutral third party manages TIG's assets.
• Today, we filed our complaint against the bank, which tells our side of the story, and we look forward to getting to the truth and vindicating ourselves in court.

Details worth keeping

Only its Dave's Hot Chicken locations are part of this bankruptcy filing. "The bank's lawsuit tells one side of the story. TIG's largest debts are to Bank Midwest, totaling nearly $8.75 million.

Related coverage

• Nrn: The seven-location operator is disputing $8.8 million in Bank Midwest debt, alleging that lender interference derailed a $30 million sale opportunity.
• Franchisetimes: Bank Sues 41-Unit Qdoba Franchisee for Defaulting on $20M Loan
• Inc: A Pennsylvania operator filed for Chapter 11 as the fast-growing chain pushes ahead with expansion. Restaurant debt and market saturation can strain even popular franchises.
• Nrn: Bank Midwest filed a suit on Aug. 6 against The Integritty Group, or TIG, which operates 41 locations.
• Franchisetimes: Bankrupt Popeyes Franchisee Sues to Keep $2.5M Deposit From Terminated Sale