Chip City Closes All 45 Stores Amid Legal Dispute
Cookie chain Chip City has permanently closed all of its remaining 22 locations due to plunging sales and funding shortages, following a lawsuit filed by co-founder Peter Phillips over unpaid severance and corporate expenditures.
The Queens-born cookie chain Chip City has permanently shut down, closing its 22 remaining locations at the end of the day on Thursday, Oct. 1, 2026. The company cited plunging sales and a funding shortage for the decision. These nationwide shutdowns occurred just days after co-founder Peter Phillips initiated a lawsuit against the enterprise regarding unpaid severance and corporate expenditures. The final wave of store closures affected every remaining shop, marking a dramatic decline from the brand’s peak of 45 locations.
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Chip City Store Closures, Legal Dispute And Financial Trouble
Phillips and Teddy Gailas established the inaugural store in Astoria back in 2017, subsequently receiving a $17.5 million investment from Enlightened Hospitality Investments. While Chip City once operated 45 stores nationwide according to the *Queens Daily Eagle*, that total had dropped to 39 by July before the company ultimately decided to shutter every location.
Inside The Email To Employees
The operational run came to an end via a single message sent to staff on Oct. 1 by company president Nicolas Baizan.
Nicolas Baizan stated the following in his email to workers:
“After almost 10 years of passionately serving our loyal customers, we have decided to cease all store operations. This means our 22 remaining stores will permanently close at close of business today. I am sorry to share that today will be your last day as a Chip City employee.”
The business released the following statement on Friday:
“Despite extensive efforts to stabilize our business in the face of significant macro-economic headwinds, we have made the very difficult decision to close all of our Chip City locations.”
Employees were completely caught off guard by the sudden store closures.
Founder Peter Phillips Sues The Company
Even though all shops have been shut down, the legal action launched by Phillips on Sept. 28 remains active. The lawsuit—which also lists Baizan and former interim CEO Fred LeFranc as defendants—asserts that the firm agreed in March to distribute $157,500 to Phillips alongside family health insurance coverage through the end of the year.
According to the legal filing, his compensation was withheld starting Sept. 18 until he relinquished four web domains and signed paperwork concerning more than $640,000 in Small Business Administration (SBA) loans that he had guaranteed. This demand forms the core of the ongoing Chip City legal dispute.
Questions Over Missing Funds
Financial inquiries surfaced as early as May, when LeFranc highlighted approximately $110,000 transferred to two separate businesses owned by Phillips, as well as roughly $280,900 sent to the personal bank account of former CFO Dion Vangelatos. The correspondence did not accuse Phillips of any misconduct, and Phillips relied on his severance release in his defense.
Peter Phillips provided this response to Chip City:
“The Company explicitly agreed that this release covers all claims, whether known or unknown. Furthermore, the Company represented at closing that it was not aware of any facts or circumstances that would justify the initiation of any claim against me. Because the expenditures referenced in your letter occurred prior to the March 2, 2026 closing date, the Company has already legally discharged its right to demand restitution for them.”
Chip City has closed its doors while these financial questions remain unresolved, and the legal battle is far from over as of this writing. The sudden closures have also left workers with pay that reportedly extends only through Oct. 18. During the height of the chain’s nationwide expansion to 45 stores, few would have anticipated that the brand would ultimately pull the plug via a single email.
Frequently Asked Questions
01When did Chip City close its stores?
Chip City permanently closed its remaining 22 stores at the close of business on Thursday, Oct. 1, 2026.
02Why did Chip City shut down?
The cookie chain blamed falling sales, macro-economic headwinds, and a lack of funding for the decision to cease all store operations.
03What is the legal dispute involving Chip City?
Co-founder Peter Phillips filed a lawsuit against the company, Baizan, and former interim CEO Fred LeFranc on Sept. 28, 2026, over unpaid severance, health insurance coverage, and demands related to SBA loans and web domains.
04How many stores did Chip City have at its peak?
At its peak, Chip City operated 45 stores nationwide.
