(The Center Square) — New York City Mayor Zohran Mamdani’s push to stop the bankruptcy sale of more than 5,000 rent-subsidized apartments in the city has been blocked, temporarily, by the federal courts.
Mamdani, who was sworn into office last week, directed the city’s Law Department shortly after taking over City Hall to intervene in the bankruptcy proceedings of more than 90 buildings with apartments all owned by Pinnacle, a real estate group.
The Mamdani administration says the company owes the city $12.7 million in unpaid fines for housing code violations. The company declared bankruptcy in May after defaulting on more than $560 million in loans.
But U.S. Bankruptcy Court judge for the Southern District of New York David Jones has declined the city’s motion to intervene in the legal fight, and reportedly informed the city that the bankruptcy sale will proceed.
Pinnacle Group, which is owned by billionaire Joel Wiener, is one of the largest landlords in New York City with roughly 140 buildings and 9,000 apartments, according to the court filings. After the company filed for bankruptcy last year, Summit Real Estate Holdings made a $450 million offer to buy dozens of buildings in Brooklyn, Manhattan, Bronx and Queens. The sale must be finalized by Jones before it can proceed.
“Completion of the bankruptcy auction process will bring financial stability along with the opportunity to stabilize services, outcomes which we would expect the City would not want to disrupt,” Pinnacle lawyer Ken Fisher said in a recent statement about the looming sale.
But lawyers for the city said in court filings that there are also concerns about the economics of the bankruptcy sale, suggesting that Summit might not have the financial resources to improve conditions in the housing complexes that it wants to take over.
“Continuing losses and mounting expenses might lead to the need for additional bankruptcies or reorganizations, a state of financial and social chaos potentially worse than the current situation of the debtors themselves,” the city said.
The Union of Pinnacle Tenants, a group of tenants who organized to oppose the sale, say the current landlord has neglected maintenance, failed to pay its utility bills and allowed apartments to deteriorate and worry that the next owner won’t improve conditions.
But the fight over the Pinnacle properties was a key issue in the recent mayoral campaign, with housing advocates warning that New York City’s rising rents and housing costs are hurting the city’s low-income residents and will increase homelessness. New York has some of the highest housing costs in the nation.
Mamdani campaigned on protecting rent-subsidized apartments, and visited one of Pinnacle’s properties in Brooklyn on inauguration day to meet with tenants and criticize living conditions in the buildings.
The court loss also comes as Mamdani faces scrutiny over his pick to lead the Mayor’s Office to Protect Tenants, Cea Weaver, who has been criticized for prior social media posts calling homeownership a “weapon of white supremacy.” Mamdani has defended Weaver, who has stated that she regrets her previous social media posts, which have since been deleted.
