The players tied for first in each group will all advance. Then they are distributed into the appropriate-sized groups as evenly as possible, adding extra players to some groups if necessary (for example, if you wound up with an odd number of players in a round of a duel, there would be a group of 3).
In your example, with just 3 players left, they would all be in a single group, playing for the win. If there were to be another tie, more rounds would be added until there was a single winner.