Employees and diners of Atelier were stunned by the Michelin-starred establishment’s abrupt closure in Lincoln Square on May 22, a collapse that comes after the restaurant relocated to a larger space in October — prompting intense scrutiny regarding a crowdfunding campaign that was meant to fund the move and provide financial stability.
Meanwhile, thousands of retail investors who financed the move with nearly a half-million dollars in small business bonds through online crowdfunding platform SMBX learned Friday that their money could well be lost as Atelier considers filing for bankruptcy.
In a note Friday afternoon to the bondholders sent through SMBX, Atelier owner Tim Lacey explained the reasons for closing the restaurant, offering his “deepest apologies” to investors.
“The longer I tried to push staying open, the bigger the debt grew and the harder it got to meet payroll and to pay our vendors,” Lacey said. “It became obvious that every day we were open only deepened the problem, and that the financial issues had become insurmountable.”
Lacey first announced the closing of Atelier in a note posted on the restaurant’s website and Instagram last week, prompting diners to express concern over the status of the crowdfunding initiative and the well-being of the restaurant’s employees, particularly as they opened a new location a mere seven months ago.
Lacey launched Atelier in 2023 at 4835 N. Western Ave., a site formerly occupied by chef Iliana Regan’s favorite, Elizabeth
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. He tapped executive chef Christian Hunter to develop a tasting menu blending global flavors with traditional American cuisine, earning the restaurant a Michelin star within its first year. Hunter left in early 2024 to open his own venture and Bradyn Kawcak stepped in as executive chef, successfully upholding Atelier’s one Michelin star.The following year, Atelier revealed its search for a bigger restaurant space and, in July, detailed its strategy to use crowdsourcing to finance the move out of the compact Western Avenue site. Through a statement on its website, Atelier said it was working with San Francisco-based SMBX, the Small Business Bonds Marketplace, to attract investors by offering various incentives.
Atelier’s parent company, Iryna LLC, raised $485,340 through its bond offering, which closed in April 2025, according to the SMBX website. The terms promised investors 10.75% interest payable over five years. The restaurant planned to use 80% of the money for working capital and relocation, 14% to refinance debt and 6% to pay SMBX’s capital raise fee, according to the prospectus.
A total of 206 investors put up an average of about $2,356 each, according to the SMBX website, which lists most of the bondholders anonymously. Investments ranged from $10 to $50,000 in the unsecured bonds, all of which may be at risk.
The project culminated in the renovation of a 1,800-square-foot facility at 4544 N. Western Ave. Located just a few blocks from its original home, the new Atelier opened its doors on Oct. 10.
Ashway Lawver, who worked front of house at Atelier for four years and before that was at Elizabeth, said the news of the closing was a gut-punch. It wasn’t until reality settled in that she started asking questions she has yet to find an answer for.
“It was such a shock on so many levels,” Lawver told the Tribune, a few days after the closure was announced. “We worked a great Friday night and were coming in for service on Saturday when we had an all-staff meeting. … Tim came up and said we’re closing … ‘There’s no service tonight, and I don’t have payroll.’ It was dead silence for five minutes.”
Lawver said employees have yet to receive their last paychecks.
“I was thinking… why doesn’t (Tim Lacey) have payroll, and this is what doesn’t add up to me,” she said. “The majority of the money that we make is paid by customers, and most of our customers prepay, and they prepay gratuity and healthcare tax as well and they’re adding large sums on top of it.”
Lawver tempered her surprise by acknowledging the “brutal” nature of the restaurant industry, noting that the business’s indebtedness was not completely unexpected.
U.S. Securities and Exchange Commission filings show the restaurant is hundreds of thousands of dollars in debt, and according to the SMBX prospectus, Atelier said they would use $70,000 of the $500,000 goal of raised funds to pay off outstanding loans.
For fiscal year 2024, Atelier generated $1,569,899 in revenue but ended with a net loss of $82,724, according to financial statements provided to SMBX. In 2023, the restaurant generated $833,747 in revenue and lost $125,750.
A number of employees questioned whether the relocation was too ambitious in an industry already in the throes of economic uncertainty. They understood some of the reasons for the move, such as a roof leak at the original location, but didn’t necessarily buy into the idea that they needed to expand to recapture the mojo after the Michelin star buzz faded, Lawver said.
“I do think there’s a little bit of it being the sign of the times,” she offered. “It’s tough as it is in the industry, and on top of it, the standards for Michelin are so high and the costs of meeting that is really high too.”
Lawver said she recalls when Lacey approached the staff with the crowdsourcing endeavor. Lacey got the idea from Hunter, she said, who had used SMBX to fund a concept.
SMBX markets small business bond offerings that pay up to 11.5% interest to “everyday investors,” who put up as little as $10 to fund everything from bagel shops to craft breweries, according to its website. The platform lists over 200 closed offerings since inception, ranging in value from $10,000 to $500,000.
Regulation crowdfunding allows a company to sell up to $5 million in securities annually to the general public through an online portal registered with the SEC. The egalitarian investment opportunity was enabled by the 2012 Jobs Act.
Lawver said several employees questioned whether crowdfunding would be the saving grace, but it wasn’t a consistent worry. Red flags only started going up late last year, she said, when employees were told to cash in their paychecks a few days after receiving them.
Lawver said Atelier employees would get paid on a Saturday, but Lacey would ask them to wait until Tuesday, after weekend earnings had cleared, to deposit the checks. A couple of her colleagues’ checks also started bouncing, Lawver said.
“Then all of a sudden, instead of paychecks, we just started getting (money through) Zelle, but we could still log on to our employee portals and see the breakdown like you would on a paystub,” she explained. “But then after a while, we weren’t getting paid through Zelle, and instead we were getting personal checks.”
Some employees in the back of the house proceeded without weeks of pay, too, Lawver said.
“When you start taking concessions financially, it’s a situation where you really, really want this to work — we really wanted our group to stay together,” Lawver said. “We sanded the walls, we painted the walls, we put the furniture together in the new space, we did everything, myself, other servers, Ali Martin, Bradyn… I mean, we did everything in our power to make it work.”
Ali Martin, Atelier’s beverage director and executive chef Bradyn Kawcak could not be reached for comment.
Kawcak posted a note on Instagram on May 17, informing his followers that “due to financial decisions that are out of my control,” he was parting ways with Atelier.
“Building a team of passionate chefs over the years has been the biggest honor of my career thus far,” Kawcak said in the post. “There would be no awards without your hard work. I hate to abruptly end this journey after so much hard work.”
Martin also shared her thoughts on Instagram, saying “it is with a heavy heart that I announce I am no longer affiliated with Atelier. … I am so incredibly grateful for all of you who have been supportive of me these years.”
Lawver said reservations in March were slow as expected while most of the area’s regular clientele was away on spring break. But then April felt slow, and May too, and reservations for the summer were far from full.
“We all started thinking that this is not feeling good, but certainly not thinking ‘OK we’re done and out,’” she said. “The part that’s so incredibly sad is what we were trying to do with that restaurant. The chefs were so incredibly talented … the front of house, the way we treat people, and the way we feel about hospitality, the way we feel about being in the neighborhood and catering to our neighborhood friends was really special.”
Lawver said she knows quite a few loyal diners of Atelier who invested into the SMBX bond, many who were into Michelin and excited to own a portion of the restaurant, with the added bonus of free meals.
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Investments of $1,000 came with dinner for two with reserve wine pairings and $5,000 came with two VIP “season tickets” with reserve pairings that were good for five visits each. A $10,000 investment came with dinner and pairings for 25 people.
Many customers also paid for a season ticket program that gave diners a discounted deal on four dinners, one for each season to experience the hyper-local tasting menu that rotated throughout the year.
“One of our regular customers invested (in the bond) and had season tickets, so those are now all unused incentives,” Lawyer said.
Lacey did not respond to the Tribune’s repeated requests for comment.
In the note to bondholders Friday, SMBX said Lacey has contacted a bankruptcy attorney and that the investing platform will keep investors informed during the process. At the same time, the crowdfunding platform said “the bonds are not obligations of SMBX.”
“If … the business enters bankruptcy, investors would be treated as creditors in the same way that other unsecured creditors with the same priority are treated,” the company said in an email to the Tribune. “SMBX, or any entity acting as intermediary in this situation, would intermediate the workout and provide details to investors when they are made available.”
Generally speaking, if an investment that’s not backed by any specific collateral or assets falls through, there aren’t many options for recourse, suggested Jeffrey Eschbach, professor in the Northwestern Kellogg School of Management, where he teaches on startup fundamentals and early-stage investing.
“It is ‘investor beware’ and it is known to be risky,” said Eschbach. “In the United States of America, you can always sue. It’s not like you’re not allowed to, but at a practical level, I think you’re just out of luck because they got a bond that was unsecured, and there’s a reason the interest rate was more than 10%. But if things go right, you’re getting a lot more money back, so that’s the trade-off.”
The classification of the Atelier bonds are unsecured, made clear in the prospectus on the SMBX website.
“A crowdfunding investment involves risk,” the Atelier prospectus states. “You should not invest in any bonds in this offering unless you can afford to lose your entire investment.”
Eschbach said it’s also evident that Atelier was in debt and open about the fact that they were raising money to cover some of it.
In any event that investors get their money back, it’s likely that bondholders will have to line up behind secured creditors before they can get a piece of whatever assets remain, he added.
Lacey and his father, Paul Lacey, appear to be listed among those who are owed money, $15,000 and $30,000, respectively.
Atelier was only the second Chicago-based business to use the crowdfunding platform. In 2021, ChildWise International raised $50,750 in a five-year bond offering, according to the site. The bilingual educator training company has been defunct since 2023, according to the Illinois secretary of state’s office.
There are signs regulation crowdfunding may be struggling more broadly, with Boston-based Mainvest, a leading player in the nascent industry, abruptly shutting down in 2024.
Meanwhile, there are no new offerings on the SMBX site, which at its peak had as many as a dozen businesses at a time vying for crowdfunding, according to a source familiar with the platform.
In the comment section of Atelier’s SMBX landing page, at least one investor expressed his frustration following the restaurant’s closing, questioning how Lacey could burn through a half-million dollars in less than a year.
“The business just wasn’t there,” Lacey said in his note to bondholders. “Maybe I was naive, maybe I overextended. (Probably both.) We tried, but in the end it just wasn’t enough.”