All 45 Chip City Locations Shut Down During Legal Battle
Cookie chain Chip City has permanently closed all 22 of its remaining nationwide locations following declining sales, funding shortages, and an active legal dispute initiated by co-founder Peter Phillips.
The Queens-born cookie chain has shut down permanently, closing its 22 remaining outlets at the end of the day on Thursday, Oct. 1, 2026, due to declining sales and a lack of funding. These closures affect every location still operating, a drastic drop from the brand’s peak of 45 stores nationwide. The shutdown comes just days after co-founder Peter Phillips initiated a lawsuit against the business regarding unpaid severance and corporate expenditures.
Chip City Store Closures, Legal Dispute And Financial Trouble
Teddy Gailas and Phillips launched the original shop in Astoria back in 2017, subsequently receiving a $17.5 million investment from Enlightened Hospitality Investments. While the business once operated 45 nationwide locations—as reported by the Queens Daily Eagle—the total had dropped to 39 by July before the final decision was made to close everything down.
Inside The Email To Employees
The brand concluded its operations following a single email sent to personnel on Oct. 1 by president Nicolas Baizan.
Nicolas Baizan stated the following in his message to 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 issued 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.”
The sudden shutdown caught employees completely unprepared.
Founder Peter Phillips Sues The Company
Although all locations have shuttered, the legal action launched by Phillips on Sept. 28 remains active. The lawsuit, which also targets Baizan and former interim CEO Fred LeFranc, contends that the company agreed in March to disburse $157,500 to him alongside maintaining his family’s 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 executed paperwork for more than $640,000 in Small Business Administration loans that he had personally guaranteed. This demand forms the core of the ongoing legal battle.
Questions Over Missing Funds
Financial inquiries surfaced as early as May, when LeFranc highlighted approximately $110,000 directed to two separate enterprises owned by Phillips and roughly $280,900 sent to the personal account of former CFO Dion Vangelatos. While that correspondence did not accuse Phillips of any wrongdoing, he relied on his severance release in his defense.
Peter Phillips provided 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.”
The business has ceased trading while these financial questions remain unresolved, and the legal dispute is far from concluded. Furthermore, the abrupt shutdown leaves employees with compensation reportedly extended only through Oct. 18. During the era when the cookie chain operated 45 locations across the country, few would have anticipated that it would ultimately close its doors entirely via a single email.
Frequently Asked Questions
01When did Chip City close all of its stores?
Chip City permanently shut down its remaining 22 stores at the close of business on Thursday, Oct. 1, 2026.
02Why did Chip City shut down?
The company cited falling sales, a lack of funding, and significant macroeconomic headwinds as the reasons for the shutdown.
03Who sued Chip City?
Co-founder Peter Phillips filed a lawsuit against the company on Sept. 28, 2026, targeting unpaid severance and company spending, while also naming president Nicolas Baizan and former interim CEO Fred LeFranc.
04How many stores did Chip City have at its peak?
At its peak, the Queens-born cookie chain operated 45 stores nationwide before the count dwindled down to 22 remaining locations prior to the final closure.
