Pappas Piping Service, Inc. is pursuing confirmation of a Chapter 11 plan in the Central District of California (Judge Mark D. Houle) roughly six months after its January 6, 2026 Subchapter V petition, having moved from a contested first-day cash-collateral fight toward a plan that promises full-plus-interest recoveries for general unsecured creditors. The design-build piping contractor filed after losing a roughly $3 million contract representing about 40% of revenue and then leaning on high-interest merchant cash advances, with senior lender Live Oak Banking Company accelerating a $3.16 million loan on October 23, 2025. The voluntary petitionDkt. 1 and accompanying cash-collateral motionDkt. 2 opened a case in which Live Oak asserts first-lien coverage over substantially all assets, including accounts receivable, plus a second lien on the residence of owners William and Anne Butler — who filed their own personal Chapter 11 in the Northern District of California in November 2025 to sell that residence. The debtor's Subchapter V status reportDkt. 38 and amended schedulesDkt. 40 schedule approximately $3.39 million in assets against $5.92 million in liabilities, with the capital stack dominated by Live Oak and a long tail of insider and seller-financed unsecured claims.
Cash-collateral use became the case's early fault line. Live Oak pressed a limited objectionDkt. 44 demanding time-limited authority, replacement liens on postpetition assets, and superpriority administrative treatment before the parties converged on consensual adequate-protection terms; the debtor has operated throughout on cash-collateral authority, with no DIP loan and no new postpetition money.
The restructuring path has since turned toward exit. On June 10, 2026 the debtor filed its disclosure statementDkt. 126 and motion for its approvalDkt. 127 describing a plan that pays general unsecured creditors 100% plus 3.8% interest over the plan term, retains Live Oak's lien through monthly payments that step down when the Butler residence sale closes, and funds distributions from projected operating cash flow rather than exit financing. The debtor has also moved to assume its non-residential real property leases and executory contractsDkt. 131. The next checkpoint is a status conference on August 4, 2026, continued by court order with no status report required.
