Pappas Piping Services: Bay Area Mechanical Contractor Files Amid Weak Construction Market

Pappas Piping Services, Inc., a San Jose-based plumbing and mechanical contractor, filed a Subchapter V chapter 11 case on January 6, 2026, in the U.S. Bankruptcy Court for the Central District of California (Santa Ana Division). The company provides design/build piping services across 10 Northern California counties and has operated since 1999.

Court filings show the company reported $3.39 million in assets and $5.92 million in liabilities as of the petition date, including $3.81 million in secured claims and $2.11 million in unsecured claims. In its Initial Status Report, the debtor said it turned to high-interest merchant cash advance financing to cover payroll and materials, missed payments to its primary lender, and entered default. The report also cites a project pipeline of roughly $11 million in specialty work expected to start in early 2026 and about $6 million in everyday plumbing bids, which the company says support a viable reorganization.

Debtor	Pappas Piping Services, Inc.
Headquarters	San Jose, California
Industry	Construction / Mechanical Contracting
Founded	1999
Incorporated	August 27, 2004
Owner	Michael Pappas
Employees	Approximately 17-20
Petition date	January 6, 2026
Court	U.S. Bankruptcy Court, Central District of California (Santa Ana Division)
Case Number	8:26-bk-10033-MH
Judge	Mark D. Houle
Subchapter V	Yes
Total Assets	$3.39 million
Total Liabilities	$5.92 million
Secured Claims	$3.81 million
Unsecured Claims	$2.11 million
Claims Agent	Not yet appointed

Restructuring and Cash Collateral

Interim cash collateral authority. The debtor's Cash Collateral Motion sought authority to use cash collateral, and the court entered an interim Cash Collateral Order on January 12, 2026 authorizing use under a 13-week budget and providing adequate protection to Live Oak Banking Company and Pirs Capital LLC. The order requires budgeted cash payments and grants Live Oak a replacement lien on postpetition accounts receivable to the extent prepetition receivables decline. A final cash collateral hearing is set for February 3, 2026 at 2:30 p.m., with Live Oak objecting to a final order and asking for limits tied to a continued hearing and updated budget.

Bank accounts and payroll. The court approved continued use of the operating account at Poppy Bank in a Bank Accounts Order, subject to daily sweeps into a debtor-in-possession account, and authorized the debtor to keep its payroll provider, Barrett Business Services, Inc. The same order denied without prejudice a request to pay prepetition lienholders for lien releases, setting a separate briefing schedule for any renewed request.

Wages and utilities. The interim Wages Order permits payment of non-insider wages and related obligations, while requiring compliance with U.S. Trustee procedures before paying insiders. The interim Utilities Order bars service shutoffs and sets adequate assurance deposits equal to each utility's average monthly bill, with procedures for utilities to seek additional assurance.

First day declaration. A First Day Declaration has not been filed as of January 23, 2026, leaving gaps in the public record on historical performance and the debtor’s restructuring strategy.

Case Status and Upcoming Milestones

Schedules filed. The debtor filed its schedules and statement of financial affairs on January 20, 2026, disclosing the asset and liability totals reflected in the Case Snapshot above.

Status conference and 341 meeting. The court set a status conference for February 3, 2026 at 2:30 p.m. and a meeting of creditors for February 4, 2026 at 10:00 a.m. (telephonic). A claims bar date has not yet been set.

Lease deadline extension. The debtor filed a Lease Extension Motion to extend the deadline to assume or reject its nonresidential real property lease to August 4, 2026. The motion identifies a lease with Dollinger Properties, Inc. for 1450 Koll Circle, Suites 106-108, San Jose, California, and is set for negative notice absent a timely objection.

Subcontractor lien payments. The debtor filed a statement on lien payments explaining it does not intend to make postpetition payments to lienholders in exchange for lien releases. Instead, it will pass through joint checks from general contractors to subcontractors and vendors when the checks are earmarked for those parties.

Company Profile

Business operations. Pappas Piping Services operates as a specialty subcontractor providing plumbing, HVAC, and mechanical contracting services throughout the San Francisco Bay Area. The Blue Book construction database lists the company’s service area as 10 Northern California counties and notes primary cities served including San Francisco, Oakland, San Jose, and Palo Alto. The company website describes its design/build piping services and regional focus.

The company’s services include plumbing and HVAC contracting, industrial piping, boiler and water heater installation, fire sprinkler systems, gas and piping work, sewer laterals, and septic systems. The Blue Book profile lists project sizes from $1,000 to $2,000,000, indicating a mix of residential work and commercial renovations.

Licensing and credentials. The company holds California Contractors State License Board License #856558 for plumbing. The Better Business Bureau lists the license as active with a March 31, 2027 expiration and identifies Michael Pappas as owner. BuildZoom reports a $15,000 contractor bond and a score of 96, with 57 permitted projects since 2005.

Workforce and leadership. ZoomInfo estimates about 20 employees, while a 2013 NLRB case identified 17 workers in a proposed bargaining unit. BuildZoom lists multiple licensees over time, including Michael Paul Pappas (RMO), William Dokos Butler (CEO/President), Guillermo Silva Jr (CEO/President), and Kevin Ronald Doede (RME).

Industry Context

California construction conditions. Commercial construction in California declined 14.8% in 2024, Construction Owners reports. A JLK Rosenberger forecast projects overall construction activity to rise 6.5% in 2025, with civil construction expected to grow 22.6% on the back of roads and water and sewer projects. Those public-sector tailwinds contrast with a slower private commercial market that affects mechanical subcontractors like Pappas Piping Services.

Bay Area market. The Bay Area’s private commercial market remains weak. The Real Deal reported that San Jose construction employment “barely budged” during 2025 and that private commercial and market-rate multifamily construction “has been scarce.” The East Bay Times reported distress across office, hotel, and apartment properties in 2024, adding pressure to project pipelines tied to commercial renovations and tenant improvements.

2026 payment-rule changes. New California construction statutes effective January 1, 2026 cap private-project retention at 5% and establish procedures for private change-order and delay claims, as summarized by Hanson Bridgett and Jones Day. The rules are designed to speed payment review and limit retention holdbacks, which can affect contractor cash flow in 2026 projects.

Frequently Asked Questions

What does Pappas Piping Services do?

Pappas Piping Services is a San Jose-based mechanical contractor providing plumbing, HVAC, and piping services across the Bay Area. The company handles projects ranging from small residential repairs to commercial renovations in the $1,000 to $2,000,000 range.

When and where did the company file for chapter 11?

The company filed a Subchapter V chapter 11 case on January 6, 2026 in the U.S. Bankruptcy Court for the Central District of California (Santa Ana Division).

What do the schedules show about assets and liabilities?

Schedules filed on January 20, 2026 report $3.39 million in assets and $5.92 million in liabilities, including $3.81 million in secured claims and $2.11 million in unsecured claims.

What are the key cash collateral terms?

The court entered an interim order on January 12, 2026 authorizing cash collateral use under a 13-week budget and providing adequate protection payments and replacement liens to Live Oak Banking Company, with Pirs Capital LLC also identified as a secured party receiving protection. A final hearing is set for February 3, 2026, and Live Oak has objected to a final order based on the current budget and record.

Has the court set a claims bar date?

No. A claims bar date has not yet been set. The meeting of creditors is scheduled for February 4, 2026.

Is there a lease extension request pending?

Yes. The debtor moved to extend the deadline to assume or reject its nonresidential real property lease to August 4, 2026 for a facility on Koll Circle in San Jose.

Who is the claims agent?

A claims agent has not been appointed. In smaller Subchapter V cases, the court may handle noticing without a third-party claims agent.

For more coverage of bankruptcy filings affecting construction contractors and other industries, visit the ElevenFlo blog.