Chip City Closes All 45 Stores Amid Legal Dispute

Chip City closes for good, as the Queens-born cookie chain shut its 22 remaining stores at the close of business on Thursday, Oct. 1, 2026, and blamed falling sales and a lack of funding. Chip City closes all stores only days after co-founder Peter Phillips sued the company, and the Chip City legal dispute covers unpaid severance and also company spending. The Chip City store closures hit every shop that was still open, a far cry from Chip City’s 45 stores at its peak.

Chip City Store Closures, Legal Dispute And Financial Trouble

Phillips and Teddy Gailas opened the first shop in Astoria in 2017, and Enlightened Hospitality Investments later put $17.5 million into the chain. Chip City’s 45 stores once spread nationwide, the Queens Daily Eagle reported, but the count was down to 39 by July. Right now, Chip City closes the book on all of it.

Inside The Email To Employees

Chip City closes out its run with one email from president Nicolas Baizan, sent to staff on Oct. 1.

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.”

The company had this to say in a Friday statement:

“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.”

The Chip City store closures caught staff off guard.

Founder Peter Phillips Sues The Company

Chip City closes all stores, but the case Phillips filed on Sept. 28 is still alive. The suit, which also names Baizan and former interim CEO Fred LeFranc, says the company agreed in March to pay him $157,500 and also cover his family’s health insurance through year-end.

His pay stopped on Sept. 18, the suit says, until he handed over four web domains and signed documents for over $640,000 in SBA loans he guaranteed. That demand sits at the heart of the Chip City legal dispute.

Questions Over Missing Funds

The money questions go back to May, when LeFranc flagged roughly $110,000 that went to two other Phillips businesses and about $280,900 that went to former CFO Dion Vangelatos’ personal account. The letter did not accuse Phillips of wrongdoing, and he pointed to his severance release.

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.”

Chip City closes with those questions still hanging, and at the time of writing, the Chip City legal dispute is far from settled. The store closures also leave staff with pay reportedly running only through Oct. 18. Back when Chip City’s 45 stores stretched nationwide, few would have guessed that Chip City closes all stores with just one email.