Chip City Shuts Down All 45 Locations During Legal Battle

The Queens-born cookie chain Chip City is shutting down permanently, terminating operations across its final 22 locations at the end of the business day on Thursday, Oct. 1, 2026, due to declining sales and a lack of funding. These closures affect every remaining storefront, marking a sharp decline from the brand’s peak when Chip City operated 45 stores.

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Chip City Store Closures, Legal Dispute And Financial Trouble

Co-founders Peter Phillips and Teddy Gailas established the first bakery in Astoria back in 2017, and Enlightened Hospitality Investments subsequently invested $17.5 million into the enterprise. According to the Queens Daily Eagle, the chain’s 45 stores expanded nationwide before the total dropped to 39 by July. Ultimately, Chip City is now bringing operations to a complete halt.

Inside The Email To Employees

The shutdown was communicated to staff through an Oct. 1 email authored by president Nicolas Baizan.

Nicolas Baizan stated the following in his message to personnel:

“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.”

Additionally, the business 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 Chip City store closures were announced.

Founder Peter Phillips Sues The Company

Even though Chip City has shuttered all locations, the lawsuit filed by Phillips on Sept. 28 remains active. The legal complaint, which also names Nicolas Baizan and former interim CEO Fred LeFranc as defendants, asserts that the company agreed in March to disburse $157,500 to him alongside family health insurance coverage through the conclusion of the year.

The litigation states that his compensation was halted on Sept. 18, pending the transfer of four web domains and the execution of documents tied to more than $640,000 in SBA loans that he had guaranteed. This demand forms the core of the Chip City legal dispute.

Questions Over Missing Funds

Financial inquiries date back to May, when LeFranc raised concerns about roughly $110,000 directed to two separate businesses owned by Phillips, as well as approximately $280,900 transferred to the personal account of former CFO Dion Vangelatos. While that correspondence did not accuse Phillips of misconduct, he referenced his severance release in defense.

Peter Phillips offered this response to the company:

“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 concludes its operations with these fiscal questions unresolved, and as of this writing, the Chip City legal dispute continues. Furthermore, the sudden store closures mean that employee pay is reportedly only secured through Oct. 18. During the period when Chip City’s 45 stores spanned the country, few could have anticipated that the brand would end operations via a single email.

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