Federal Judge Blocks Mamdani From Halting Huge NYC Bankruptcy Sale
A federal bankruptcy judge has delivered an early setback to newly sworn-in New York City Mayor Zohran Mamdani, temporarily blocking his administration’s attempt to halt the sale of more than 5,000 rent-subsidized apartments tied up in a major bankruptcy case.
U.S. Bankruptcy Judge David Jones of the Southern District of New York ruled that the city may not intervene to stop the ongoing auction of properties owned by Pinnacle Group, one of the city’s largest private landlords.
Pinnacle filed for bankruptcy in May after defaulting on approximately $560 million in loans. The Mamdani administration has argued the firm also owes the city $12.7 million in unpaid housing code violations. Shortly after taking office, Mamdani directed the city’s Law Department to step into the proceedings, warning that the proposed sale could destabilize thousands of tenants in subsidized units.
Judge Jones, however, rejected the motion and ordered the bankruptcy auction process to proceed.
Pinnacle, owned by billionaire real estate investor Joel Wiener, controls more than 140 buildings and roughly 9,000 housing units across the five boroughs. Court documents indicate that Summit Real Estate Holdings has offered $450 million to acquire approximately 90 of the properties.
“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,” said Ken Fisher, an attorney representing Pinnacle.
City attorneys pushed back in court filings, arguing that Summit may lack the financial capacity to properly rehabilitate the buildings. They warned that “continuing losses and mounting expenses might lead to additional bankruptcies or reorganizations, a state of financial and social chaos potentially worse than the current situation.”
Tenant advocacy groups have accused Pinnacle of neglecting maintenance and allowing conditions to deteriorate, while others worry that new ownership could mean rent increases or reduced oversight. The dispute became a focal point during the mayoral campaign, as Mamdani ran on a platform of preserving rent-subsidized housing and expanding tenant protections. On his inauguration day, he visited a Brooklyn property tied to Pinnacle to criticize the landlord’s record.
The legal defeat compounds political pressure on Mamdani as he defends his appointment of Cea Weaver to lead the Mayor’s Office to Protect Tenants. Weaver has drawn scrutiny over prior comments describing homeownership as “a weapon of white supremacy.” She later apologized, stating the remarks were “poorly phrased and not reflective of my work.”
At the same time, Mamdani’s political allies within the Democratic Socialists of America are facing heightened scrutiny for their role in organizing nationwide anti-Trump demonstrations. The DSA — where Mamdani has been a prominent figure — has partnered with far-left activist groups, including the Party for Socialism and Liberation and The People's Forum, in protests targeting President Donald J. Trump’s immigration enforcement policies and broader America First agenda.
Some of those activist networks have been linked to businessman Neville Singham, who has faced questions over ties to entities associated with the Chinese Communist Party. The GOP-led House Oversight Committee voted Thursday to subpoena Singham for records concerning his organization’s U.S.-based activities and financial connections.
Under the slogan “No Wars. No Kings. No ICE.” organizers have mobilized demonstrations in cities nationwide. According to the DSA’s New York chapter, “Trump invaded Venezuela, sacrificing lives for oil. Four days later, ICE forces invading Minneapolis murdered a legal observer recording their activity. Trump wants to be an emperor and a tyrant. Socialists must fight back.”
National DSA leaders have pledged to stage protests in more than 30 cities, accusing the administration of “imperialist war abroad and fascist terror at home.”
As the bankruptcy fight over thousands of New York apartments proceeds in federal court, Mamdani now finds himself navigating pressure from Wall Street lenders, frustrated tenants, and growing federal scrutiny of the activist networks aligned with his political base. For a mayor who campaigned on reshaping the city’s housing landscape through democratic socialist policies, the clash between market realities and ideological ambition is unfolding in real time.