TIG Reaper - Chapter 11 Case Summary

Business Description

TIG Reaper LLC, together with Reaper Time PA 1 LLC, Reaper Time PA 2 LLC, and Reaper Time NJ 1 LLC (collectively, the "Debtor Entities"), operate seven franchised Dave's Hot Chicken restaurants at leased properties in Pennsylvania, Delaware, and New Jersey. Three additional locations are in late stages of development, one in New Jersey and two in Delaware, bringing the leased portfolio to ten sites. Each location is a custom designed Dave's Hot Chicken location. The Debtor Entities employ almost 200 people.

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Corporate History

TIG Reaper LLC, the lead Debtor, is a Delaware limited liability company and the majority owner of Reaper Time PA 1 LLC, Reaper Time PA 2 LLC, and Reaper Time NJ 1 LLC, each formed under the laws of the Commonwealth of Pennsylvania or the State of New Jersey. Jiger Patel is a member and manager of each of the Debtor Entities and serves as Executive Officer; Manisha Patel is a Member. Neither draws a salary.

• Each of the Debtor Entities maintains a separate existence, keeping separate books, records, and creditor lists and filing separate tax returns, while operating in conjunction with the others. TIG Reaper LLC maintains separate locations, while each of Reaper Time PA 1 LLC, Reaper Time PA 2 LLC, and Reaper Time NJ 1 LLC is a single level entity. Creditors overlap across the group depending on the location of each store.

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Operations Overview

Franchise Platform and Vendor Requirements

The Debtor Entities hold franchise agreements with Dave's Hot Chicken Franchise Co., LLC (the "Franchisor") for each location and participate in the loyalty programs of the Dave's Hot Chicken system. Proceeds of a gift card sale are withdrawn the day of sale and sent to the Franchisor, and the entity that honors a gift card receives those funds from the processor on a daily basis. The Debtor Entities honor all promotions and marketing campaigns, and characterize the franchise agreements as market based and of substantial benefit to each entity.

The Franchisor designates the four primary food vendors the Debtor Entities use: MQ & Son Distributing (Martins potato rolls), Nuco2, Performance Food Services, and Restaurant Technologies, Inc. Each vendor is paid week to week for current orders; weekly spending with Performance Food Services runs $70,000, with no money currently owed to that vendor. Prepetition balances are nominal relative to the weekly spend with each vendor and relate primarily to deliveries within twenty days of the Petition Date. To the extent vendors supply fresh produce, maintaining the weekly payment cadence is intended to avoid claims and liens under the Perishable Agricultural Commodities Act ("PACA").

Back-Office Management

Each of the Debtor Entities is party to a management agreement with TIG Corp., an affiliated company, which provides back-office accounting and other corporate functions for a combined fee of 4% of gross revenue.

Workforce

Payroll is paid biweekly, one week in arrears, and funded on the Friday of the funding week depending on the entity, with workers compensation insurance paid alongside each payroll. The Debtor Entities are current on payroll, payroll taxes, and benefits. The Declaration states a biweekly payroll covering 194 employees and elsewhere describes almost 200 employees. Reaper Time PA 2 LLC accounts for 30 of those employees and a biweekly payroll of $31,488.27, and Reaper Time NJ 1 LLC currently has one employee and a biweekly payroll of $3,234.60. The Rehoboth Beach location under TIG Reaper LLC is set to open on or about October 15, 2026, with payroll set to begin September 25, 2026.

Cash Receipts and Utilities

A substantial amount of funds arrives through credit card processing. The Debtor Entities maintain utility services at each location and are current on all of them, and have insurance in place for all locations.

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Prepetition Obligations

Bank Midwest Facilities

In August 2024, Bank Midwest, a division of NBH Bank ("Bank Midwest"), extended two loans to TIG Reaper LLC: a term loan in the original principal amount of $1.65 million, evidenced by a Term Loan A Note dated August 15, 2024, and a DLOC Loan in the original principal amount of $8.35 million, evidenced by a DLOC Note. On or about August 15, 2024, TIG Reaper LLC executed a Security Agreement granting Bank Midwest a first-priority security interest in all of its assets. Under a subsequent Modification Agreement, Reaper Time NJ 1 LLC, Reaper Time PA 1 LLC, and Reaper Time PA 2 LLC agreed to jointly and severally assume all obligations and payments under the original loan agreement with TIG Reaper LLC. Bank Midwest holds a first lien on most assets, and the Debtor Entities are current on all franchise fees and royalties due to the Franchisor and, on a prepetition basis, paid secured creditors, taxing authorities, employees, and food vendors on a current basis.

Merchant Cash Advances and Other Junior Positions

The Debtor Entities received funds from merchant cash advance lenders prior to the Petition Date under security agreements junior to Bank Midwest:

• Parafin, Inc. — dated January 2026, roughly $105,000.00, allegedly secured by future receivables.

• Mint Funding, Inc. — dated March 13, 2026, roughly $150,000.00, also secured by alleged future receivables.

• Rewards Network — dated January 15, 2026, roughly $50,000.

Allegiance Funding Group holds a secured equipment lease with regard to Reaper Time NJ 1 LLC, and the Debtor Entities also received funding from private individuals. Because the Debtor Entities have no accounts receivable, maintain only minimal inventory, and have equipment and tenant improvements secured by various lenders with liens at specific locations, they take the position that the merchant cash advance lenders and private investors are wholly unsecured, and the proposed cash flow does not contemplate payments to the merchant cash advance companies.

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Events Leading to Bankruptcy

The Queso Entities and the Cross-Default Demand

Bank Midwest also lent to a group of 45 entities bearing the TIG Queso and Queso Time names (collectively, the "Queso Entities"), which, for separate and distinct reasons, agreed to the appointment of a receiver over their assets in order to liquidate their locations for the benefit of their creditors. When it extended those loans, Bank Midwest did not obtain or request a guarantee or other security from the Debtor Entities. Bank Midwest nonetheless alleges that all assets owned by the borrower secure the indebtedness owed by the Queso Entities, and pressed the Debtor Entities to sign what the Declaration describes as a draconian forbearance agreement that would have forced them to pay the Queso Entities' debts.

Acceleration, the Receivership Action, and the Lost Sale

After the Debtor Entities refused to sign, Bank Midwest purported to accelerate their loans and informed the Franchisor that it intended to seek a receiver. On or about September 8, 2026, Bank Midwest filed a Verified Complaint against the Debtor Entities alleging various non-payment defaults, which the Debtor Entities dispute, together with an Emergency Motion for a Receiver that invoked the Queso Entities' receivership as a basis for appointment. The Debtor Entities maintain that Bank Midwest has been paid current and that they are not in any payment default.

At the time, the Debtor Entities were seeking to sell their businesses and had received an offer of approximately $30 million. The Declaration describes that offer as more than enough to satisfy their loans from Bank Midwest, and attributes the offer being cut nearly in half, along with the hampering of further sale efforts, to word having spread to potential buyers.

Separately, Parafin, Inc. and/or Mint Funding is believed to have sent a demand letter to Doordash, and Doordash/Stripe has frozen nearly $100,000.00 of the Debtor Entities' assets.

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Chapter 11 Filing

The Debtor Entities filed Chapter 11 in the Eastern District of Pennsylvania on September 21, 2026, seeking joint administration so that pleadings may be filed under one docket number and name. The stated objective is to reorganize around the seven open restaurants as operating entities, which the Debtor Entities aver are the highest and best use of their assets, preserving those locations and almost 200 jobs.

Adversary Proceeding Against Bank Midwest

Concurrently with the first day motions, the Debtor Entities filed an Adversary Complaint against Bank Midwest seeking declaratory relief and damages stemming from what the complaint characterizes as Bank Midwest's unlawful efforts to collect the Queso Entities' loans by improperly accelerating the Debtor Entities' separate loans, manufacturing non-monetary defaults, and filing suit to appoint a receiver. The relief sought is a declaration and/or injunction confirming that the Debtor Entities are not responsible for the debts of the Queso Entities, together with damages for the loss in value caused by Bank Midwest's conduct.

Cash Collateral and the Insider DIP Loan

Cash collateral consists of cash of $20,000, cash in transit of $200,000, and inventory of $105,000, roughly $325,000.00 in total, a level the Debtor Entities say continued operations will maintain. The proposed budget provides for full payment of post-petition expenses, lease payments, franchise fees, payments to all lessors, employee-related items, insurance, utilities, adequate protection payments to secured lenders including monthly payments to Bank Midwest, and a reserve for legal fees, with rent paid currently beginning with October rent. Weekly deposits of $15,000 fund the post-petition legal fees of Debtor's counsel and Special Counsel. Adequate protection is proposed in the form of continued operations, monthly payments to Bank Midwest, and replacement liens. The Debtor Entities also seek turnover of the Doordash/Stripe funds.

The principals of the Debtor Entities are providing a junior debtor-in-possession secured loan in the amount of $200,000 to fund and cushion the first interim period.

Other First-Day Relief

• Franchise agreements and loyalty programs — Authority, pending confirmation of the Plan, to honor the franchise agreements and all loyalty programs with Dave's Hot Chicken Franchise Co., LLC, which the Debtor Entities describe as necessary to the reorganization. There is no current cure amount due to the Franchisor and no gift card liability.

• Utilities — A motion under section 366 to require continuous utility service at all locations, with all post-petition payments to be made and deposits of one month of service paid over sixty days in two installments.

• Food vendors — Authority to continue the existing week-to-week arrangements with the four Franchisor-mandated vendors, to minimize disruption and avoid PACA liens.

• Prepetition wages — Authority to pay prepetition wages, which the one-week-arrears payroll cycle leaves at a minimum of fourteen days depending on the filing date. No employee would receive prepetition payroll in excess of the priority amount under the Bankruptcy Code, and no insiders would receive payroll under the order.

• Bank accounts — Authority, with appropriate safeguards, to continue using the prepetition bank accounts; redirecting credit card processing funds to new accounts under amended processor agreements carries substantial negative cash flow risk.

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Key Dates

• August 15, 2024 – Bank Midwest Term Loan A Note and Security Agreement executed by TIG Reaper LLC.

• January 2026 – Parafin, Inc. agreement.

• January 15, 2026 – Rewards Network agreement.

• March 13, 2026 – Mint Funding, Inc. agreement.

• September 8, 2026 – Bank Midwest files Verified Complaint and Emergency Motion for a Receiver.

• September 21, 2026 – Chapter 11 petitions filed; Adversary Complaint against Bank Midwest filed with the first day motions.

• September 25, 2026 – Payroll begins for the Rehoboth Beach location.

• October 15, 2026 – Targeted opening of the Rehoboth Beach location.