Chip City Closes All 45 Stores Amid Legal Dispute
Queens-born cookie chain Chip City is permanently closing its final 22 locations amid declining sales, funding shortages, and an active lawsuit filed by co-founder Peter Phillips regarding unpaid severance and corporate spending.
The Queens-born cookie chain Chip City is shutting down permanently, closing its final 22 locations at the end of the day on Thursday, Oct. 1, 2026, due to declining sales and a lack of funding. These closures come just days after co-founder Peter Phillips initiated a lawsuit against the business regarding unpaid severance and corporate spending. The final wave of closures impacts every remaining shop, marking a steep decline from the brand’s peak of 45 stores.
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Chip City Store Closures, Legal Dispute And Financial Trouble
Phillips and Teddy Gailas launched the original location in Astoria in 2017, later securing a $17.5 million investment from Enlightened Hospitality Investments. While Chip City’s 45 stores once spanned across the country, as reported by the Queens Daily Eagle, that number dropped to 39 by July. Now, the company is bringing its entire operation to an end.
Inside The Email To Employees
The shutdown was communicated to personnel through an Oct. 1 message from president Nicolas Baizan.
Nicolas Baizan said this in the email to employees:
“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.”
In a statement issued Friday, the organization explained:
“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 largely taken by surprise by the sudden shutdown.
Founder Peter Phillips Sues The Company
Although the retail operations have ceased, the legal action filed by Phillips on Sept. 28 remains active. The complaint—which also targets Baizan and former interim CEO Fred LeFranc—alleges that the company agreed in March to provide him with $157,500 alongside health insurance coverage for his family through the end of the year.
According to the lawsuit, his compensation was halted on Sept. 18 pending the transfer of four web domains and the signing of paperwork concerning more than $640,000 in SBA loans he had guaranteed, forming the core of the ongoing dispute.
Questions Over Missing Funds
Financial inquiries surfaced in May when LeFranc highlighted approximately $110,000 sent to two separate businesses owned by Phillips and roughly $280,900 transferred to the personal account of former CFO Dion Vangelatos. While the letter did not accuse Phillips of any wrongdoing, he relied on his severance release in his defense.
Peter Phillips said this in his 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.”
These unresolved questions persist as the brand shuts its doors, and the litigation is far from finished. Meanwhile, affected staff members reportedly face a pay schedule that extends only until Oct. 18. During the peak of its nationwide expansion with 45 stores, few would have anticipated that the enterprise would ultimately conclude its journey via a single employee email.
