By Jacob Kaye
How sweet is that?
Chip City, a cookie company founded in Astoria, suddenly closed all of its stores nationwide this week amid a complicated legal dispute between the company and its former CEO and founder, who has been asked to answer for the mismanagement of nearly $1 million in company funds.
The cookie chain, which has expanded from its first store in Queens in 2017 to 45 locations nationwide, on Thursday ordered its employees to permanently close all of its storefronts, according to a copy of an email allegedly sent by Chip City management to its employees and which was posted on Reddit.
The company blamed the closures on a “challenging (business) environment” that had “had a negative impact on our sales.”
“Unfortunately, we no longer have the funding to operate this business,” the message said.
Chip City did not respond to a request for comment.
But beyond its difficulties attracting customers, Chip City appears to be experiencing financial difficulties linked to its relationship with Peter Phillips, the company’s founder and former senior executive.
Phillips sued the company on September 28, several days before it began boarding up its storefronts. The former CEO claimed that the company controlling Chip City, Enlightened Hospitality Investments, and its principals, Nicolas Baizan and Fred LeFranc, broke an agreement to pay him severance and cover his health insurance.
Phillips reportedly reached an agreement with Chip City regarding benefits when he stepped down as CEO in March and agreed to remain 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 escalate in May, when LeFranc, the company’s former interim CEO, sent a letter to Phillips requesting information about hundreds of thousands of dollars withdrawn from Chip City accounts and used to pay for expenses unrelated to Chip City.
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 founded in Astoria. Massi also recently closed its doors without warning last month.
The letter also noted a number of rent payments made for Chip City’s Astoria location. While the base rent for the store, 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 would have paid $4,750 in rent before increasing the payments to $5,000 per month from November 2022 to September 2025. From October 2025 to December 2025, the company would have started paying $5,500 in rent before increasing the payment again in January 2026 to $6,500, according to the letter.
Unexplained rent payments were also allegedly made for one of its Brooklyn locations.
According to the letter, between June 2024 and January 2026, Chip City paid approximately $280,900 into a personal bank account belonging to Dion Vangelatos, the company’s former chief financial officer who left Chip City a few months before Phillips. Chip City’s payment system listed Vangelatos’ account as “Smith St Rent.”
The payments allegedly varied in quantity and frequency, but averaged about $15,000 per month, the letter said.
In response to the letter, which did not accuse Phillips of wrongdoing, Phillips told the company he could not be held responsible for financial matters because of a clause in his severance agreement with Chip City.
“The Company has 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 a claim against me. Since the expenses mentioned in your letter occurred before the closing date of March 2, 2026, the Company has already legally discharged its right to demand their restitution.”
According to Phillips’ lawsuit, Chip City stopped paying the former executive on Sept. 18 and said it would not resume payments until he gave the company control of four Chip City websites and more than $640,000 in SBA loans, which Phillips partially controls.
Phillips’ attorney did not respond to a request for comment Friday.
Several Chip City stores in New York appeared to be closed Friday, including its original store on 30th Avenue in Astoria.
Police officers were briefly seen outside the Upper West Side neighborhood of Chip City, the West Side Rag reported.
According to the NYPD, two people were seen on surveillance footage Friday entering the store on Columbus Avenue before leaving with an unknown amount of money. No arrests have been made.
Chip City’s growth from a local Queens candy store to a national chain came after a major $10 million investment from Enlightened Hospitality Investments in 2022, which pumped an additional $7.5 million into the company in 2024.
Chip City employees would be paid through Oct. 18, according to the message sent to workers.
Gn bussni
