Thousands of NYC rentals just hit bankruptcy court

Renting an apartment in New York City was never easy. Everyone wants to live and build a career in a city that never sleeps, the place “dreams are made of.”

That’s what makes the competition in the city so intense and allows landlords to impose strict requirements. We all know what some of these are by now — a strong credit score (600-680), proof of income 40-50 times the monthly rent, and sometimes a guarantor or co-signer.

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Then, there are upfront costs with broker fees, security deposit, and of course, the first month’s rent. Despite the obstacles, rental demand is still strong, most likely due to high homeownership costs.

In the first quarter of the year, the median asking rent for 0-2 bedrooms in the Big Apple was around $3,365, up by 7.2% year over year. Rent for 3+-bedroom units grew 1.2% compared to the first quarter of 2024, reaching $4,773.

All boroughs saw year-over-year rent growth, with Manhattan leading at 5.5%, followed by Brooklyn at 5%, Queens at 4.3%, and the Bronx at 0.7%, according to Realtor.

Yet even in a strong rental market, not all landlords are staying afloat. One of New York City’s largest landlords has put dozens of apartment-holding companies into bankruptcy.

Joel Wiener puts properties with thousands of residential units into bankruptcy

A famous name in the New York City real estate market, Pinnacle Group CEO Joel Wiener, has placed dozens of apartment-holding companies into Chapter 11 bankruptcy. The filings directly impact thousands of rental units across Manhattan, Brooklyn, Queens, and the Bronx.

The bankruptcy filings list between $500 million and $1 billion in assets and liabilities, and affect around 82 holding companies tied to more than 5,000 rental units. Weiner is trying to consolidate the case under the entity Broadway Realty I Co. LLC, which owns a 73-unit building at 4530 Broadway, according to Law 360.

Under Chapter 11, businesses and individuals can reorganize their financial affairs in a process where a debtor can continue to operate their business while developing a plan to repay creditors.

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Several months ago, Flagstar Bank initiated foreclosure proceedings in state court against most of the 5,000 units that are part of the bankruptcy filing. Now, Chapter 11 pauses legal actions against the companies.

Per the report, Pinnacle itself and its core affiliates are not part of the bankruptcy cases.

Construction firms lead the creditor list

The 20 largest unsecured creditors in the bankruptcy name a collection of construction-related firms including Liftco Elevator Group, Sentry Elevator Corp., and Eastern Elevator of New York, with each claiming a debt of more than $300,000.

Utilities like the New York City Water Board, National Grid, and Con Edison are also among the creditors, each owed over $100,000.

Wiener was also involved in a separate legal dispute over $1.75 million in unpaid legal fees to the firm Gibson Dunn that previously represented Pinnacle in a labor class-action case.

Pinnacle Group has a long history of legal challenges, including past allegations of rent overcharges and tenant mistreatment. While the company has previously settled with state officials and tenant groups, this latest bankruptcy could be more challenging to resolve.

So does this mean tenants are at risk?

Currently, tenants shouldn’t be at risk, because buildings are still operating, rent should be collected, leases are still valid, and maintenance should be ongoing. Also, New York is known for strong tenant protections.

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However, there could be long-term consequences such as delayed repairs, potential property sales if the bankruptcy leads to liquidation, or uncertainty if new owners take over.

The bankruptcy court will manage the restructuring as the holding companies work to reorganize debt and regain financial stability. The results will impact whether Flagstar Bank and other creditors are able to recoup their losses.

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