Federal judge blocks Mamdani from halting bankruptcy sales

The Center Square ^ | 1/9/26 | Chris Wade

[CFW]

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.

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TOPICS: Business/Economy; Constitution/Conservatism; US: New York
KEYWORDS: bankruptcy; housing; mandani; newyork; ny; realestate; sales

[CFW]

Mamdani may not be able to be the dictator he envisions.

[Sarah Barracuda]

Commies will learn soon enough having the courts in their back pocket doesnt go as planned

[knarf]

WHOA !

A real estate scandal.

Waitin' on my President for tidbits . . . .

[Paladin2]

It sounds like the local legal system doesn’t find it is owned by the new Mayor.

[frank ballenger]

Now it really sounds like a fantasy novel plot. A “judge rules against Mamdani.” Not against Trump. Has the justice system gone bonkers?

[cgbg]

If the buyer had any brains they would back out of the deal—and let the city deal with the wreckage.

[plain talk]

FWIW here is the AI google response about why Pinnacle is in bankruptcy.

AI Overview
Pinnacle Group, a major New York City real estate landlord, filed for Chapter 11 bankruptcy in May 2025 for 80 properties due to a combination of rising operating costs, limited rent increases imposed by rent-stabilization laws, mounting debt, and foreclosure actions by its lender.

Key Reasons for the Bankruptcy Filing
Foreclosure Pressure: Flagstar Bank, which is owed more than $560 million in mortgage debt, initiated foreclosure proceedings against the properties. Pinnacle filed for bankruptcy to halt these actions and manage an organized sale of the properties.

Financial Strain from Rent Laws: A significant factor cited by Pinnacle and real estate groups is the Housing Stability & Tenant Protection Act of 2019 (HSTPA). These laws significantly restricted landlords’ ability to raise rents on rent-stabilized units, including after a tenant moves out or following building improvements. This created a mismatch between constrained revenues and rapidly rising operating expenses (e.g., property taxes, insurance, utilities, and maintenance).

Cash Flow Issues: Pinnacle claimed it was facing “no cash on hand” and ongoing operating challenges, leading to difficulties in paying its mortgage debt and covering maintenance costs. Flagstar Bank, however, has alleged that Pinnacle may have misdirected cash flow to pay bondholders instead of the primary lenders.

Poor Building Conditions and Violations: The properties in question have a history of tenant complaints and numerous housing code violations. New York City officials noted that “immediately hazardous” violations increased fourfold from 2019 to 2024. Tenants and city officials argue that Pinnacle neglected maintenance, leading to deteriorating living conditions, power cutoffs in common areas, and outstanding fines owed to the city.

[PeterPrinciple]

history of tenant complaints and numerous housing code violations

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well, if the city owns it the housing code violations can go away..............................

[chopperk]

The Feds and Judges will make this clown tow the line.

[Sacajaweau]

I think so, too....but watch out for Hochul....she plays dirty and Schumer guides her dirty deeds.

[31R1O]

I wonder if the city gets none of the fines and penalties if the bankruptcy proceeds.

[plain talk]

good point. :-) Ain’t communism grand.

[tired&retired]

This is why Trump has each of his parcels of real estate in a separate corporation. I understand that he has more than 1,000 different corporations. With LLC’s, this is really easy to do and does not complicate the situation very much.

Each one stands alone and cannot cause a bankruptcy of one to cause another parcel to go under.

[Sacajaweau]

I think so, too....but watch out for Hochul....she plays dirty and Schumer guides her dirty deeds.

[cgbg]

Yup—the nursing home industry is an even more extreme example.

Because of widespread litigation the industry responded by creating one LLC to own the land and buildings and (sometimes) major equipment (beds, etc.) and a separate identity of interest LLC to operate the facility.

The operating LLC would be liable for injuries or deaths at the facility while the ownership entity remained untouched by the litigation.

[butlerweave]

Sue every time he blinks ,LOL

[RetiredTexasVet]

Just the tip of the iceberg. A couple of years of communism and NYC will be a third world sh-thole. Won’t matter if the sale goes through, the city will unleash a hellish horde of inspectors on the new owners.

[joshua c]

mamdani is trying to stall the sale

because he and his fellow travelers

do not have 450 mil available

there is a law on the books recently passed that ngos

get first crack on any real estate sale

[joshua c]

well said

name a city housing project that is well maintained

management contracts go to political cronies(see valjar)

[tired&retired]

This has been the model of organized crime since the 1980’s, including many investment groups such as the Carlisle Group (This is the group that Bush Sr. was representing after presidency.) I had clients get screwed out of several hundred thousand dollars in A/R when the operating entity went bankrupt, only to reopen the very next day.

I now do the same with my clients. Never put the operating entity and the real estate in the same entity. This way, if the operating entity goes bankrupt, they can open up the next day in the same facility with the same employees under a different corporation.

I’ve also split it into Real Estate, Machinery & Equipment, Labor Provider (Leasing) and Operating Entity into 4 different entities. This type of setup is especially beneficial in estate planning and or transfer of a business from parent to child while protecting the parent’s equity.

Trusts can also be excellent tools in limiting liability and protecting assets.

When I got into this profession, the estate exclusion was $600 K, now it’s $15 million per person. However, many states, like Pennsylvania nail you bigtime with estate and inheritance taxes. In Pennsylvania it can be 15% inheritance tax to unrelated parties.

I could make a bundle under the IRS whistleblower rules just by disclosing the unrecognized income on entity basis termination when they fail to adjust for accumulated losses and don’t to bring them back into income.