New York City Mayor Zohran Mamdani suffered an early setback in his administration after a federal bankruptcy judge temporarily blocked the city’s attempt to halt the sale of thousands of rent-subsidized apartments owned by the Pinnacle Group. The ruling allows the bankruptcy process to continue, despite city officials’ objections and concerns from tenant advocates.

Mamdani, who was sworn into office just last week, directed the city’s Law Department to intervene in the bankruptcy case involving more than 90 residential buildings. The city argues Pinnacle owes roughly $12.7 million in unpaid housing code violation fines and has long failed to maintain acceptable living conditions in its properties.

Pinnacle Group, controlled by billionaire real estate investor Joel Wiener, filed for bankruptcy protection in May after defaulting on more than $560 million in debt. Court records show the company owns approximately 140 buildings and about 9,000 apartments across New York City, many of them rent-stabilized or subsidized.

A proposed $450 million bid from Summit Real Estate Holdings seeks to acquire dozens of Pinnacle properties across Brooklyn, Manhattan, Queens, and the Bronx. Pinnacle’s attorneys argue the sale would bring financial stability and improved services, while city lawyers warn the buyer may lack the resources to properly rehabilitate the buildings.

Tenant groups remain skeptical. The Union of Pinnacle Tenants claims years of neglect, unpaid utility bills, and worsening living conditions under current ownership. Advocates fear a new owner could continue the pattern, further harming vulnerable residents in a city already facing soaring housing costs.

The court loss adds to mounting scrutiny of Mamdani’s early leadership, including controversy over staffing choices and recent foreign policy comments. Still, the mayor insists protecting rent-subsidized housing remains central to his agenda as legal battles over the Pinnacle properties continue.