A federal judge has temporarily blocked New York City Mayor Zohran Mamdani from intervening in the bankruptcy sale of thousands of rent-subsidized apartments across New York City, dealing an early setback to the mayor’s housing agenda.
US Bankruptcy Judge David Jones ruled the city could not halt the ongoing bankruptcy auction involving properties owned by Pinnacle Group, one of the city’s largest landlords.
Pinnacle filed for bankruptcy protection in May after defaulting on approximately $560 million in loans tied to its extensive portfolio of residential buildings throughout New York City.
The company controls more than 140 buildings and roughly 9,000 apartment units spread across the five boroughs, including more than 5,000 rent-subsidized apartments.
The Mamdani administration sought to intervene in the bankruptcy proceedings, arguing the sale could destabilize housing conditions for thousands of low-income tenants living in the affected properties.
City officials also claimed Pinnacle owed New York City approximately $12.7 million in unpaid housing code fines connected to maintenance and building violations.
Judge Jones rejected the city’s effort to block or delay the auction process and ruled the bankruptcy proceedings should continue moving forward through federal court.
Court filings showed Summit Real Estate Holdings offered approximately $450 million to purchase roughly 90 of Pinnacle’s properties as part of the restructuring process.
Ken Fisher, an attorney representing Pinnacle during the bankruptcy proceedings, defended the sale and argued the transaction would help stabilize the buildings financially.
“Completion of the bankruptcy auction process will bring financial stability along with the opportunity to stabilize services,” Fisher said during the legal dispute.
Lawyers representing New York City argued that Summit might lack the financial resources needed to repair and maintain aging apartment buildings already facing complaints from tenants, per the Conservative Brief.
City filings warned the sale could create “financial and social chaos potentially worse than the current situation” if conditions inside the buildings continued deteriorating after the transfer.
Tenant advocacy groups opposing the sale have accused Pinnacle of neglecting maintenance issues and allowing housing conditions to worsen in multiple apartment complexes.
Some tenants and housing activists also expressed concerns that new ownership could eventually increase rents or reduce oversight involving subsidized housing protections.
The bankruptcy fight became a major issue during Mamdani’s mayoral campaign, where he pledged to protect rent-stabilized housing and strengthen protections for low-income residents.
On his inauguration day, Mamdani visited one of the Brooklyn properties connected to the dispute and criticized Pinnacle’s management record and treatment of tenants.
The court ruling also comes amid growing scrutiny surrounding Mamdani’s broader housing and racial equity policies during his first months as mayor.
Mamdani recently faced criticism over appointing Cea Weaver to lead the Mayor’s Office to Protect Tenants after past comments resurfaced describing homeownership as “a weapon of white supremacy.”
Weaver later apologized and said the comments were poorly worded and did not reflect her actual work or broader views on housing policy.
Mamdani has also drawn criticism from analysts over his recently released racial equity plan, which expanded calculations involving the cost of living and poverty in New York City.
Santiago Vidal Calvo argued the plan artificially broadened poverty definitions to justify larger government intervention in housing and economic policy throughout the city.
