New York City socialist Mayor Zohran Mamdani is having a bad week.
A federal judge has temporarily blocked Mayor Zohran Mamdani’s attempt to stop the bankruptcy sale of more than 5,000 rent-subsidized apartments across New York City, posing an early challenge to the newly sworn-in mayor’s housing reform agenda.
U.S. Bankruptcy Judge David Jones of the Southern District of New York ruled that the city could not intervene in the ongoing sale of properties owned by Pinnacle Group, one of the city’s largest landlords.
The company declared bankruptcy in May after defaulting on $560 million in loans, and the Mamdani administration has claimed it owes the city $12.7 million in unpaid housing code fines.
Mamdani, who took office last week, had directed the city’s Law Department to intervene, arguing the deal could worsen housing instability for thousands of tenants living in subsidized apartments.
But Judge Jones rejected the city’s motion, saying the bankruptcy auction must move forward.
Pinnacle, owned by billionaire Joel Wiener, controls more than 140 buildings and 9,000 units across the five boroughs. Court filings show Summit Real Estate Holdings has offered $450 million to buy roughly 90 of the company’s 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 lawyers countered in filings that Summit might not have the financial strength to rehabilitate the buildings, warning 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 groups opposing the sale say Pinnacle has neglected maintenance and allowed conditions to deteriorate, while others fear the new owners could raise rents or further reduce oversight.
The battle over Pinnacle’s holdings became a flashpoint during the mayoral race, where Mamdani campaigned on preserving rent-subsidized housing and protecting low-income tenants. On inauguration day, he visited one of the properties in Brooklyn to criticize the company’s record.
Separately, a major legal battle is beginning to take shape in New York City after a coalition representing thousands of small businesses accused city leaders of pushing ahead with a controversial plan that they say could threaten family-owned stores.
The dispute centers on one of Mayor Zohran Mamdani’s signature campaign promises, and opponents are now preparing to challenge the proposal in court before the first government-run store ever opens its doors.
The Multicultural Business Coalition announced it is preparing to file a lawsuit against New York City over Mamdani’s plan to create five taxpayer-funded grocery stores, arguing the project would unfairly compete with privately owned supermarkets and neighborhood bodegas.
The coalition’s board voted this week to move forward with legal action, according to chairman Frank Garcia.
Garcia told the New York Post the organization expects to notify the mayor’s office of its intent to sue in the coming days.
“The mayor doesn’t seem to want to sit down with us,” Garcia said.
“He won’t be able to bully these lawyers we are going to bring in.”
According to the coalition, it plans to raise approximately $1 million to finance the lawsuit and a broader public awareness campaign.
The organization says it represents 50 chambers of commerce made up of Asian, African, Caribbean, Hispanic, Middle Eastern and Jewish-owned businesses throughout New York City.
Business owners argue the city’s proposal would place government-funded stores in direct competition with privately owned neighborhood markets that already operate on thin profit margins.
Mayor Mamdani recently announced additional details about the program, including plans for stores to sell basic grocery items such as produce, meat, milk, cheese and bread at prices approximately 30% below what consumers typically pay elsewhere.
The city says it expects the first location to open next year in the Bronx.
Supporters of the lawsuit argue the city-backed stores would enjoy advantages unavailable to private businesses.
According to the mayor’s office, the government-run supermarkets would operate on municipally owned property and therefore would not pay commercial rent.
Critics contend that the advantage would make it difficult for nearby businesses to compete on price.
