The Queens-born cookie chain Chip City has shut down for good, shuttering its 22 remaining locations at the close of business on Thursday, Oct. 1, 2026, while citing dwindling sales and insufficient funding. The shutdown comes just days after co-founder Peter Phillips filed a lawsuit against the company, an ongoing legal battle that centers on unpaid severance and corporate expenditures. These closures affect every remaining shop, marking a sharp decline from the brand’s peak of 45 stores.
Also Read: Broadcom (AVGO) to lend Anthropic up to $42 billion for AI Chips
Chip City Store Closures, Legal Dispute And Financial Trouble
Phillips and Teddy Gailas launched the brand’s inaugural shop in Astoria back in 2017, later securing a $17.5 million investment from Enlightened Hospitality Investments. While the enterprise once operated 45 nationwide storefronts—as reported by the *Queens Daily Eagle*—that total had dropped to 39 by July. Now, the brand is closing the book on its entire operation.
Inside The Email To Employees
The chain concluded its run via a single message sent to personnel by president Nicolas Baizan on Oct. 1.
Nicolas Baizan stated the following in his correspondence with the staff:
“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 enterprise released this 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 largely taken by surprise when the shutdown was announced.
Founder Peter Phillips Sues The Company
Even with the complete cessation of business, the lawsuit initiated by Phillips on Sept. 28 remains active. The complaint, which additionally names Baizan and former interim CEO Fred LeFranc, claims that the business agreed in March to provide him with $157,500 alongside family health insurance coverage through the end of the year.
According to the legal filing, his compensation was halted on Sept. 18 until he surrendered four web domains and executed documents related to over $640,000 in Small Business Administration loans that he had guaranteed. This demand forms the crux of the ongoing litigation.
Questions Over Missing Funds
Financial inquiries began surfacing in May, when LeFranc highlighted approximately $110,000 transferred to two separate Phillips-affiliated businesses, as well as roughly $280,900 sent to the personal account of former CFO Dion Vangelatos. The corresponding letter did not allege wrongdoing by Phillips, who has pointed to his severance release in his defense.
Peter Phillips offered this response to the enterprise:
“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 financial questions remain unresolved as the chain shuts its doors, and at the time of writing, the legal conflict is far from over. Furthermore, staff members reportedly face a payroll cutoff of Oct. 18. Back when the company operated 45 nationwide locations, few would have anticipated that the brand would fold entirely via a single email message.