On his 3rd day in office, newly sworn-in Mayor Zohran Mamdani suffered a stinging legal defeat that exposed the limits of municipal power in New York’s housing crisis.
Federal bankruptcy Judge David S. Jones rejected his emergency request to delay the sale of 5,100 rent-stabilized apartments owned by billionaire Joel Wiener’s troubled Pinnacle Group. The courtroom details show why.
A New Mayor’s First Major Test
Hours after taking office January 1st, Mayor Zohran Mamdani toured a crumbling Pinnacle-owned building in Brooklyn and pledged immediate intervention in the company’s bankruptcy proceedings.
By Monday, January 6th, his administration filed an emergency motion seeking a 30-day delay of the auction to evaluate the buyer, but the clock was already running in federal court.
What Went Wrong At Pinnacle
For decades, billionaire Joel Wiener built a $2 billion real estate empire by buying run-down rent-regulated buildings, rehabilitating them, and raising rents within legal limits.
By the early 2000s, Pinnacle controlled about 20,000 apartments, but repeated scrutiny followed, including settlements in 2006 and 2022, until 2019 changed the math.
The Law That Changed Everything
On June 14, 2019, New York State enacted the Housing Stability & Tenant Protection Act, dismantling Wiener’s business playbook.
The law ended vacancy decontrol, capped Major Capital Improvement rent increases at 2% annually instead of 6%, and made condo conversions far harder, setting up a debt problem that soon worsened.
“We Never Saw It Coming”
“The Housing Stability & Tenant Protection Act of 2019, high inflation rates, increasing operating expenses — which continue to outpace permitted rental increases for rent-stabilized apartments — and an inability to collect rents have critically impaired the value of rent-stabilized assets in NYC,” DBRS Morningstar reported in 2024.
By fiscal year 2024, Pinnacle posted a $12 million loss and debt costs surged.
The Debt Comes Due
Flagstar Bank, holding $564 million in non-cross-collateralized loans against Pinnacle’s portfolio, moved toward enforcement as payments stopped in January 2025.
In March 2025, it filed pre-foreclosure actions across nearly 100 Pinnacle entities, as Zarasai Group reported a $549 million working capital deficit and total debt topping $1.1 billion.
Thousands Living In Neglect
Behind the balance sheets were 5,100 families in deteriorating conditions across 93 buildings in all 4 boroughs.
Pinnacle stacked up 5,000+ housing violations and 14,000 tenant complaints, while “immediately hazardous” Class C violations rose 4x from 2019 to 2024, prompting tenants to document conditions in detail.
“The Systematic Neglect Is Really An Act Of Theft”
A Harlem tenant organizer named Vivian summed up the anger outside federal bankruptcy court: “There are huge problems the landlord systematically chooses not to address. The systematic neglect is really an act of theft. In my mind, there was a contractual agreement that if we pay rent, the landlord will provide us certain services to provide stable housing, safe, habitable homes, and it’s barely that.”
Their organizing soon faced a legal wall.
The Bankruptcy Filing
By May 2025, facing inevitable foreclosure, Wiener filed 82 affiliated entities into Chapter 11 bankruptcy.
The consolidated structure let Pinnacle market the portfolio as a whole, gaining time and leverage, while Flagstar Bank remained the dominant secured creditor shaping the outcome, especially after filings said the company had “no cash on hand.”
Enter Summit Properties
In late December 2025, Summit Properties USA submitted a $451 million stalking-horse bid, setting the floor for the bankruptcy auction.
Led by Israeli businessman Zohar Levy, Summit already owned about 3,000 units across 90 New York City buildings and operated in Germany and Israel, yet public details on capacity to rehabilitate remained thin.
“No Information” About The Buyer
In Monday filings, New York City’s Corporation Counsel said there had been “no information” provided on Summit, including its principals, landlord history, or financial resources and capability.
HPD’s preliminary analysis concluded “the proposed sale would not lead to a supportable business” if units remained rent stabilized or rent controlled, raising doubts about what the price really signaled.
The Valuation Gap
A December 2024 independent appraisal valued Flagstar’s portfolio at $826 million, nearly double Summit’s $451 million bid, highlighting how far rent-stabilized valuations have fallen.
Per-unit prices for 100% rent-stabilized buildings were down 37.6% on an inflation-adjusted basis, and the city warned the deal looked overleveraged, but another issue complicated matters.
Family Ties Cloud The Sale
Investigative reporting revealed Summit’s local property manager, Denali Management, was signed into deeds by Jonathan Wiener, brother of Pinnacle CEO Joel Wiener.
Jonathan runs Chestnut Holdings, listed on the Public Advocate’s Landlord Watchlist in 2021, raising conflict concerns, even as his firm said it had “neither any business connection to Pinnacle nor any connection whatsoever to any Summit bid.” Was it really separate?
Mamdani’s 30-Day Plea
On Monday, January 6th, just 5 days into his administration, Mayor Mamdani filed an emergency motion asking for a 30-day delay to evaluate alternatives.
The city said it was owed $12.7 million in unpaid fines and violations and wanted time for nonprofits or tenant-led entities to assemble competing bids, but bankruptcy deadlines rarely bend.
Judge Jones Says No
Federal Bankruptcy Judge David S. Jones held a hearing on Wednesday, January 8th, and rejected Mamdani’s motion the same day.
Court reports said “the judge ruled that the sale could move forward without delay,” and the auction, held privately at Weil, Gotshal & Manges, produced no competing bids, effectively handing Summit a win by default.
What The Loss Means For Mamdani
The rejection landed as an early blow for a mayor who campaigned on tenant protection and promised to “hold landlords who violate the law to account.”
His day-1 move signaled housing would dominate the agenda, but federal bankruptcy law proved largely immune to City Hall pressure, even as Deputy Mayor Leila Bozorg said: “We are assessing all of our options.”
Tenants’ Long Fight Against Pinnacle
The Union of Pinnacle Tenants gathered affidavits describing unsafe conditions, while rallies outside court amplified their demands.
They pointed to Pinnacle’s history, including a 2006 settlement over overcharging that required a forensic audit, and a 2022 case where CEO Wiener admitted hiding capital repair costs during condo conversions and paid $330,000 in penalties.
What Summit Now Inherits
Summit now controls about 5,100 rent-stabilized apartments across 93 buildings, with legal rents averaging $1,200–$1,700 depending on location.
It must address 5,000+ violations while dealing with roughly $564 million in debt tied to Flagstar’s loans, and it says it will invest in “capital expenditures and preventive maintenance,” but skepticism is growing.
The Broader Housing Crisis
The Pinnacle collapse reflects distress across rent-stabilized ownership citywide, where about 10% of rent-regulated buildings now report operating costs exceeding rental income, up from 5% in 2017.
New York City has about 960,000 rent-stabilized apartments, and Trepp CMBS data shows 16.43% delinquency for rent-regulated property loans versus under 1% for non-regulated, shaping policy fights ahead.
What Comes Next For Tenants
Mayor Mamdani has signaled more fights, promising to explore legal options even after the auction.
The city is considering reviving the Third Party Transfer Program to move distressed buildings to nonprofits, and COPA will give nonprofits a first chance to bid on certain properties beginning in 2027, while Mamdani also pushes a rent freeze starting October 2026. Will those timelines arrive in time?
The Fight Continues
Judge Jones’s decision ended Mamdani’s immediate intervention, but the larger battle over rent stabilization and building conditions is still live.
The Pinnacle sale now tests whether Summit can run rent-stabilized housing sustainably while catching up on repairs, or whether New York’s affordable housing market keeps sliding into deeper distress, with tenants waiting to see what the new landlord does first.
Sources:
Housing Stability & Tenant Protection Act of 2019. New York State, October 2, 2019
Judge rejects Mayor Mamdani’s bid to slow bankruptcy sale of 5100 NYC apartments. Gothamist, January 9, 2026
Summit Properties Wins Auction to Acquire 5,100-Unit Pinnacle Portfolio. Commercial Observer, January 9, 2026
Bidder For Pinnacle’s 5,000-Unit Portfolio Has Ties To CEO Joel Wiener’s Brother. Bisnow, January 8, 2026
Mayor Mamdani Signs EO to Revitalize Mayor’s Office to Protect Tenants. NYC Mayor’s Office, January 1, 2026