Queens-founded Chip City shutters all stores amid legal dispute

Chip City’s storefront in Astoria was closed on Friday, Oct. 2, 2026. Eagle Photo by Jacob Kaye

By Jacob Kaye

How sweet it ain’t.

Chip City, a cookie company founded in Astoria, suddenly shuttered all of its storefronts nationwide this week amid a messy legal dispute between the company and its former CEO and founder, who was asked to answer for the mismanagement of nearly a million dollars of the company’s funds.

The cookie chain, which expanded from its first shop in Queens in 2017 to 45 locations nationwide, ordered its employees to permanently close all of its storefronts on Thursday, according to a copy of an email reportedly sent from Chip City management to its employees that was posted to Reddit.

The company blamed the closures on a “challenging [business] environment” that had “negatively impacted our sales.”

“Unfortunately, we no longer have the funding required to operate this business,” the message said.

Chip City did not respond to a request for comment.

But beyond its struggles to attract customers, Chip City appears to be having financial difficulties stemming from its relationship with Peter Phillips, the company’s founder and former top executive.

Phillips sued the company on Sept. 28, several days before it began shuttering its storefronts. The former CEO claimed that Chip City’s controlling company, Enlightened Hospitality Investments, and its executives, Nicolas Baizan and Fred LeFranc, had broken an agreement to pay him severance and cover his health insurance.

Phillips had allegedly reached a deal with Chip City for the benefits when he stepped down as CEO in March and agreed to stay on as an advisor during the transition.

According to the lawsuit, the company agreed to pay him $157,500 and keep him and his family on the company’s health insurance plan through the end of the year.

But tensions between the founder and the company began to heat up in May, when LeFranc, the company’s former interim CEO, sent a letter to Phillips seeking information about hundreds of thousands of dollars taken from Chip City’s accounts and used to pay for non-Chip City expenses.

The letter, which was included in Phillips’ lawsuit against his former employer, claims that approximately $110,000 was used to make payments for two of Phillips’ other businesses, Somedays Bakery and Massi’s, both of which were founded in Astoria. Massi’s also recently shuttered with little warning last month.

The letter also flagged a number of rent payments made for Chip City’s Astoria location. While the base rent for the storefront, which was leased to the company by one of Phillips’ family members, was $4,000 a month, Chip City said the company overpaid for years.

In fall 2022, the company allegedly paid $4,750 in rent before upping the payments to $5,000 a month from November 2022 until September 2025. From October 2025 through December 2025, the company allegedly began paying $5,500 in rent before increasing the payment again in January 2026 to $6,500, according to the letter.

There were also alleged unexplained rent payments made for one of its Brooklyn locations.

According to the letter, between June 2024 and January 2026, Chip City paid approximately $280,900 to a personal bank account belonging to Dion Vangelatos, the company’s former chief financial officer who left Chip City a few months before Phillips did. Chip City’s payment system listed Vangelatos’ account as “Smith St Rent.”

The payments allegedly varied in quantity and frequency but averaged around $15,000 per month, the letter said.

In response to the letter, which didn’t accuse Phillips of wrongdoing, Phillips told the company that he couldn’t be held liable for the financial questions because of a clause in his severance agreement with Chip City.

“The Company explicitly agreed that this release covers all claims, whether known or unknown,” Phillips wrote to Chip City. “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.”

According to Phillips’ lawsuit, Chip City stopped paying the former executive on Sept. 18 and said it wouldn’t resume payments until he gave the company control of four Chip City websites and over $640,000 in SBA loans, which Phillips partially controls.

Phillips’ attorney did not respond to a request for comment on Friday.

Several of Chip City’s New York City locations appeared to be closed on Friday, including its original shop off of 30th Avenue in Astoria.

Police officers were briefly spotted outside of Chip City’s Upper West Side location, the West Side Rag reported.

According to the NYPD, two people were spotted on surveillance footage on Friday entering the Columbus Avenue store before taking off with an unknown amount of money. No arrests have been made.

Chip City’s growth from a local Queens sweet shop to a national chain came after a major $10 million investment from Enlightened Hospitality Investments in 2022, which sprinkled another $7.5 million into the company in 2024.

Chip City employees will allegedly be paid through Oct. 18, according to the message sent to the workers.