BIRMINGHAM, Ala. (WCSC) — The founder of Pihakis Restaurant Group has filed for personal Chapter 7 bankruptcy following a wave of restaurant closures, lawsuits and mounting creditor claims tied to the collapse of the restaurant group.
Nick Pihakis filed the Chapter 7 bankruptcy petition Thursday in the U.S. Bankruptcy Court for the Northern District of Alabama in his individual capacity, not on behalf of Pihakis Restaurant Group or any affiliated LLCs. Huntsville attorney Kevin Heard is representing Pihakis in the case.
The filing lists roughly $44 million in debts against $10.6 million in assets, a gap of more than $33 million, with much of that debt tied to personal guarantees on restaurant-related loans, leases and obligations.
Chapter 7 is a liquidation bankruptcy that places a debtor’s nonexempt assets under the control of a court-appointed trustee, who can sell those assets and distribute proceeds to creditors. Unlike Chapter 11, Chapter 7 does not allow a debtor to reorganize debts through a court-approved repayment plan.
The filing comes after months of restaurant closures, supplier lawsuits, landlord disputes and lender claims that have surfaced since more than a dozen Pihakis-affiliated concepts abruptly shut down this spring. Pihakis personally guaranteed many of the loans and other obligations tied to the restaurant group’s operations, according to court filings.
Pihakis no longer has any operating restaurants, and all leases tied to his concepts have been terminated. The corporate offices of Pihakis Restaurant Group have also been shuttered for months.
Court records show nearly a dozen lawsuits filed in Alabama and South Carolina seeking more than $23.4 million in unpaid debts and other damages. Claims have been filed by Mike Mouron-affiliated landlords, Florida-based Fox Funding, Evans Meats, Five Star Produce, Shaw Technology, Robertson Banking Co. and other creditors.
That figure does not include future attorney fees, interest or additional claims that could emerge through the bankruptcy process.
Montgomery-based Shaw Technology LLC sued Pihakis Restaurant Group on July 8, alleging the company defaulted on an IT services agreement for 29 restaurant locations and a promissory note tied to unpaid technology expenses. The lawsuit claims PRG failed to pay required invoices, leaving an outstanding balance of $117,800.35, and seeks the return of 29 firewall devices valued at approximately $30,450.
That filing came days after a June 30 lawsuit by Five Star Produce of Central Alabama against Pihakis and numerous affiliated restaurant entities in Shelby County Circuit Court, alleging they failed to pay $238,396.31 for produce and specialty food products supplied on credit. The largest unpaid balances include Little Donkey Homewood of $46,728, Little Donkey Downtown Montgomery of $32,672, Tasty Town of $30,854, Little Donkey Valley Post of $24,425 and Luca Lagotto Homewood of $24,295, according to the lawsuit. The supplier alleges Pihakis personally guaranteed payment of the debts.
A judge recently granted partial summary judgment in favor of Evans Meats Inc., which sued Pihakis and more than 20 affiliated restaurant entities in April, seeking $394,238.73 in unpaid invoices. The court delayed consideration of Evans’ claims against Pihakis personally for 90 days. The Evans complaint alleges Pihakis personally guaranteed payment for many of the accounts and seeks $220,639.21 from him under those guaranties.
In Shelby County, Dunnavant Valley Dining LLC alleges unpaid rent and related charges tied to the shuttered Valley Post development now total roughly $7.35 million. The complaint alleges PRG Valley Post LLC defaulted on a long-term lease covering four restaurant buildings that housed Rodney Scott’s BBQ, Little Donkey, Hero Doughnuts and Luca/Lucy.
Separate lawsuits filed by Mouron-affiliated entities in Jefferson County seek to enforce landlord liens against furniture, fixtures and equipment left behind at former restaurant locations. One of those filings alleges PRG stopped paying rent at downtown Birmingham properties in January and now owes roughly $589,000 after eventually surrendering the spaces.
Also this summer, the owner of a downtown Birmingham property at 101 12th St. S. filed an eviction and unlawful detainer suit, alleging PRG failed to vacate a former test kitchen space after receiving a termination notice.
Florida-based Fox Funding Group LLC filed suit June 4, alleging more than two dozen Pihakis-affiliated entities defaulted on two merchant cash advances after receiving $700,000 in financing. In addition to seeking more than $718,000 in damages, Fox alleges restaurant assets and revenue streams were transferred to new entities in an effort to place them beyond the reach of creditors, which Fox argues constitutes fraudulent transfers. The lawsuit names Pihakis, Luca/Salice chef Rita Bernhardt, Little Donkey founder Joshua Gentry and developer Mike Mouron as defendants.
Gentry previously said that Little Donkey and Salice are no longer affiliated with Pihakis Restaurant Group and are operating independently.
Even as litigation tied to Valley Post continues, the development has begun attracting new tenants. In early July, Waldo’s Chicken & Beer signed a lease to occupy one of the restaurant spaces formerly operated by Pihakis Restaurant Group and plans to open this fall. Saw’s BBQ also announced it would open in Valley Post, and Walk-On’s Sports Bistreaux announced plans to open in the former Pihakis-owned Rodney Scott’s location in downtown Homewood.
Multiple efforts to reach Pihakis Restaurant Group and founder Nick Pihakis have been unsuccessful since the closures began in April.
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