I've only ever spent very little time in chat, so maybe I'm missing some important context, but I feel strongly enough about this that I think it deserves to be an answer, though it has been mentioned in the comments.
I'm distinctly getting the impression that this will be a one-strike, no-warnings policy. This seems fundamentally unfair. Certainly a chat room "going bad" is a gradual process, and there ought to be several red flags along that process where it would be natural to give mods a warning of "get your things together, or we're going to have to delete you". In this way, a room which might be beginning to display bad tendencies could be guided back towards good behavior, and the necessity to annihilate could be avoided. Of course, rooms which refuse to comply will have to receive their due consequences.
Other people have mentioned strengthening chat room moderation tools. Again, I really don't have enough experience in chat to attest to any lack thereof, but enabling moderators to do their job better would certainly go hand in hand with encouraging moderators to do their job better, rather than preemptively pulling the plug with little to no warning.
Aside from this, I'm definitely in favor of deleting chat rooms that refuse to comply with the Code of Conduct; I just feel we need to take care to strike the right balance and not be needlessly punitive where the necessary action might not need be so drastic.