S.M.F. Group Files Chapter 11 as Processors Withhold $6M

S.M.F. Group Inc., the operating company behind nine New York City and Washington, D.C. restaurants known collectively as the Fireman Group, filed chapter 11 petitions on August 9, 2026 in the U.S. Bankruptcy Court for the Southern District of New York. The case, No. 26-11893, covers S.M.F. Group and 21 affiliated debtors, jointly administered before Judge Shireen A. Barday.

The filing followed a payment-processor shutoff that cut off the group's card-transaction revenue at the end of July 2026, after a two-year shift from merchant cash advance financing to a liquidity crisis. Newly appointed Chief Restructuring Officer Jordan Meyers of SierraConstellation Partners LLC said the debtors had less than $100,000 in cash on hand at the petition date and were filing to stabilize operations and recover access to their own revenue. Ten of the debtor entities simultaneously sued American Express, Toast, and Stripe seeking turnover of the withheld funds, and the debtors are separately seeking postpetition financing to bridge the cash gap.

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S.M.F. Group Files Chapter 11 as Processors Withhold $6M

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MCA Debt Spiral and the Payment-Processor Standoff

The Fireman Group's restaurants — including Bond 45, Brooklyn Diner, Café Fiorello in Manhattan and Washington, D.C., Trattoria Dell'Arte, and USA Brooklyn Delicatessen — trace to Sheldon Fireman, who opened his first restaurant in 1963 and died in October 2025; his estate holds all or a majority interest in each debtor. The First Day Declaration attributes the group's distress to construction-cost overruns and a restaurant fire that predated the pandemic, followed by government-mandated shutdowns that reduced foot traffic tied to Broadway, tourism, and Midtown offices. Customer traffic did not return to pre-pandemic levels until the fourth quarter of 2025.

To survive the pandemic, the debtors drew on Paycheck Protection Program and Economic Injury Disaster Loan financing and fell into arrears with certain landlords. Beginning in the spring of 2024, the debtors turned to merchant cash advances to bridge continuing liquidity gaps. By March 2026, more than 30 MCAs across 11 lenders were outstanding, with aggregate obligations of at least $5.5 million. The declaration says the MCA funders' remittances were calculated against gross receipts without deducting sales taxes collected for the state or tips owed to employees, so the fixed daily draws consumed cash the debtors never owned outright, compounding the shortfall. The debtors also borrowed $4.5 million in original principal from family members and friends of the Fireman family, unsecured and interest-free, and fell behind on sales tax payments starting in October 2025.

By March 2026, the debtors stopped paying several MCA funders, resumed sales tax payments, and retained SierraConstellation Partners and restructuring counsel to pursue an out-of-court workout; some MCA lenders agreed to settlements while others pursued collection litigation. The debtors have sued MCA funder ODK Capital LLC, d/b/a OnDeck, in New York state court to void one advance, and the declaration characterizes the MCAs generally as usurious, unenforceable loans subject to recharacterization or subordination, with possible avoidance and civil RICO claims against the funders. The immediate trigger for the filing came when certain MCA funders sent payment-redirection notices to the debtors' card processors: withholding began intermittently in late April 2026 and became total at the end of July 2026, cutting off funds needed for payroll, rent, taxes, and vendor payments.

Capital Structure: BankUnited, FHGRF, and Family Financing

As of the petition date, the debtors owed approximately $2.76 million under a BankUnited, N.A. loan and security agreement dated March 11, 2016, secured by a first-priority lien on substantially all assets of Bond 45, Diner 43, Diner 57, and the now-closed Redeye Grill. The debtors also carry roughly $1.04 million in SBA Economic Injury Disaster Loan obligations across several entities, which the debtors believe are largely unperfected, and the $4.5 million unsecured family-and-friends loan owed by The Fireman Group Cafe Concepts, Inc.

The largest prepetition secured obligation is a Secured Demand Promissory Note dated March 17, 2026, held by FHGRF LLC, with a balance of not less than $6.14 million as of the petition date. Of that balance, at least $2.38 million was advanced as emergency bridge funding after the processors stopped remitting payments at the end of July. Total secured claims across the debtor group reached approximately $9.98 million. A consolidated balance sheet as of December 2025 showed total assets of $26.1 million against total liabilities of $39.1 million, an owners' equity deficit of roughly $13.0 million, and landlord payables of $13.4 million.

Proposed DIP Financing and the Grossman Recusal

The debtors have asked the court for a senior secured superpriority DIP facility from FHGRF LLC of up to $6.5 million, with interim availability of $1.5 million in new money plus an additional $800,000 available at the lender's discretion, and roughly $2.3 million in additional funding needed during the interim budget period. The proposed structure includes a two-for-one roll-up of specified prepetition secured obligations tied to interim advances. No interim or final DIP order had been entered as of August 13, 2026.

FHGRF's members are described in the declaration as current minority investors in some of the debtors' restaurants, along with friends and members of the Fireman family. Benjamin Grossman, who has served as the Fireman Group's own CEO since 2020, holds a 35.8% non-controlling equity interest in FHGRF and recused himself from negotiating and approving the DIP facility on the debtors' behalf. BankUnited, the debtors' senior secured lender on the restaurant-level facility, declined to provide postpetition financing when approached.

Turnover Suit Against Amex, Toast, and Stripe

On August 10, ten of the debtor entities filed Adversary Proceeding No. 26-01077 against American Express Travel Related Services Company, Toast Inc., and Stripe Inc. and its affiliate Stripe Payments Company, seeking turnover of withheld card-processing proceeds, declaratory relief, and a permanent injunction. As of the petition date, the complaint alleges American Express was withholding not less than $3.30 million, Toast not less than $2.56 million, and Stripe not less than $101,885 — an aggregate of at least $5.96 million in restaurant receipts.

The debtors simultaneously moved for a temporary restraining order and preliminary injunction requiring the processors to turn over withheld and postpetition transaction proceeds without further withholding or delay based on claims asserted by MCA funders or other third parties. No disposition of either the adversary complaint or the injunction motion appeared on the docket through August 13, 2026.

Key Timeline

The voluntary petition docket entry set the case's earliest procedural deadlines, and the court moved on first-day relief within three days of filing.

Frequently Asked Questions

Who is the claims agent for S.M.F. Group Inc.?

The debtors have proposed Epiq Corporate Restructuring, LLC as claims and noticing agent, but no order approving that retention had been entered as of August 13, 2026.

Has the court approved DIP financing for S.M.F. Group?

No. The proposed $6.5 million facility from FHGRF LLC remained pending as of August 13, 2026, with no interim or final order entered on the docket.

Who is representing S.M.F. Group Inc. in the bankruptcy?

Raines Feldman Littrell LLP, led by David S. Forsh, serves as the debtors' proposed general bankruptcy counsel. SierraConstellation Partners LLC, through Jordan Meyers, serves as financial advisor and provides the Chief Restructuring Officer.

What triggered the S.M.F. Group bankruptcy filing?

A payment-processor shutoff at the end of July 2026, following redirection notices sent by certain merchant cash advance funders, cut off the debtors' card-transaction revenue and left them with less than $100,000 in cash at the petition date.

The MCA-driven liquidity crisis behind the Fireman Group's filing echoes other recent chapter 11 cases tied to merchant cash advance financing, including Crosby Marine Transportation's freefall filing. Among other recent restaurant-sector cases, Tijuana Flats, Razzoo's Cajun Cafe, and Buca di Beppo each sought court protection amid similar liquidity pressure on multi-unit dining operators.