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

Pappas Piping Services, Inc., a San Jose-based plumbing and mechanical contracting company with 27 years of operating history, filed for chapter 11 bankruptcy protection on January 6, 2026, in the U.S. Bankruptcy Court for the Central District of California (Santa Ana Division). The company, founded in 1999, provides design/build piping services across 10 Northern California counties and employs approximately 17-20 workers.

The filing included four first-day motions seeking authority to use cash collateral, maintain existing bank accounts, pay prepetition employee wages, and ensure continued utility services. A First Day Declaration, the detailed filing that typically explains a company's financial position and causes of distress, has not yet been filed, leaving key information about the company's liabilities and restructuring objectives pending.

The bankruptcy comes during a period of weakness in Bay Area construction employment. San Jose construction employment remained stagnant throughout 2025, while private commercial work has been described as scarce across the region. Nationally, chapter 11 commercial bankruptcy filings among contractors increased 72% in 2023 compared to 2022, with cash flow cited as the most common cause of construction company bankruptcy.

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
Filing 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
Claims Agent	Not yet appointed

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. According to The Blue Book construction database, the company's service area spans 10 Northern California counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, and Sonoma. Primary cities served include San Francisco, Oakland, San Jose, and Palo Alto. The company's website describes the firm as providing complete design/build piping services.

The company's service offerings include plumbing contracting, HVAC contracting, mechanical contracting, industrial piping, boiler and water heater installation, fire sprinkler systems, gas and piping work, sewer laterals, and septic tank systems. The company handles both residential work, such as water heater replacements, and commercial projects including hotel and office building renovations. According to industry databases, the company's project range spans from $1,000 to $2,000,000. This range positions the company as a mid-sized specialty contractor capable of handling substantial commercial projects while also serving the residential market.

The company's Yelp listing indicates business hours of Monday through Friday, 7:00 AM to 4:00 PM, consistent with typical construction trade schedules. The company also maintains a presence on Procore Network, a construction management platform used by general contractors and project managers to identify and vet subcontractors for projects.

Licensing and credentials. The company holds California Contractors State License Board License #856558 for plumbing services. According to the Better Business Bureau, this license is active and expires March 31, 2027. The BBB listing identifies Michael Pappas as the owner and notes the company has been in business for 27 years, having been founded on January 1, 1999, and incorporated on August 27, 2004.

According to BuildZoom's contractor profile, Pappas Piping Services maintains a $15,000 contractor bond with American Contractors Indemnity Company. BuildZoom assigns the company a score of 96, placing it in the top 20% of California contractors. The same source indicates the company has completed 57 permitted projects since 2005, with work spanning San Jose, San Francisco, Oakland, Palo Alto, and surrounding Bay Area communities. Projects range from residential water heater replacements to commercial tenant improvements exceeding $1.25 million.

The Blue Book profile indicates the company holds certifications from IFMA (International Facility Management Association), ANSI (American National Standards Institute), BOMA (Building Owners & Managers Association), and NITC (National Inspection Testing Certification). These certifications indicate the company's involvement in commercial facility management and building systems work beyond basic residential plumbing. The BOMA affiliation, in particular, suggests experience with commercial office buildings and multi-tenant facilities, while NITC certification relates to testing and certification of fire protection and plumbing systems.

The company's preferred equipment brands include American Standard, Delta, and Kohler, major manufacturers of plumbing fixtures and equipment commonly specified in commercial and residential construction projects. Established relationships with these manufacturers may provide access to warranty support, technical resources, and potentially preferential pricing arrangements.

Industry classification. The company is classified under several Construction Specifications Institute divisions: Division 22 (Plumbing), Division 23 (HVAC), and Division 40 (Process Integration). These divisions cover the full spectrum of mechanical systems work in commercial and residential construction. Division 22 encompasses domestic water piping, sanitary waste and vent piping, storm drainage, and plumbing fixtures. Division 23 covers HVAC systems including ductwork, refrigerant piping, and equipment installation. Division 40 addresses process piping systems used in industrial and commercial facilities.

The Blue Book profile lists the company's main lines of business as plumbing contractors, air conditioning contractors, mechanical contractors, industrial piping, and heating contractors. This diversified service offering positions the company to pursue a range of project types across the construction market. The company operates as a non-union contractor but handles prevailing wage (Davis-Bacon) projects in addition to private commercial and residential work, allowing it to compete for public sector contracts that require certified payroll compliance.

Corporate structure and leadership. BuildZoom's licensing records identify several individuals associated with the company over time: Guillermo Silva Jr (CEO/President), Michael Paul Pappas (RMO - Responsible Managing Officer), William Dokos Butler (CEO/President), and Kevin Ronald Doede (RME - Responsible Managing Employee). The presence of multiple CEO/President designations in licensing records suggests changes over time or different filing roles. The Better Business Bureau identifies Michael Pappas as the owner.

The company's address history shows operations at multiple San Jose locations. BuildZoom lists 1450 Koll Circle Suite 108, San Jose, CA 95112, while the Better Business Bureau lists 2109 O'Toole Ave #P, San Jose, CA 95131-1338. The company's phone number across multiple sources is (408) 922-0958.

Workforce. According to ZoomInfo, the company employs approximately 20 workers. An NLRB case from 2013 identified 17 employees in a proposed bargaining unit. The workforce consists primarily of plumbers, pipefitters, and HVAC technicians.

Labor Relations History

The company's labor relations history includes a 2013 union representation case before the National Labor Relations Board. On December 5, 2013, the United Association of Plumbers, Steamfitters & Refrigeration Fitters, Local Union 393 filed a representation petition (Case 32-RC-118380) with NLRB Region 32 in Oakland, California. The case identified the company's location as Milpitas, California.

The union sought to represent a bargaining unit described as "All plumbers, pipefitters, and HVAC technicians," with sheet metal workers, carpenters, laborers, office clerical staff, guards, and supervisors excluded from the proposed unit. The petition identified 17 employees in the proposed bargaining unit.

The case proceeded through the NLRB process with a hearing order issued on February 19, 2014, to reschedule the representation hearing. However, before the election could be conducted, the union withdrew its petition on February 24, 2014. The NLRB issued a representation dismissed (RD) order on February 26, 2014, closing the case. No formal election was held.

The company has continued to operate as a non-union contractor since the 2014 case dismissal.

Chapter 11 Filing

Voluntary petition. Pappas Piping Services, Inc. filed a chapter 11 voluntary petition on January 6, 2026, in the U.S. Bankruptcy Court for the Central District of California (Santa Ana Division). Court filings list Case No. 8:26-bk-10033-MH and assign the matter to Judge Mark D. Houle.

The filing initiated the automatic stay provisions of Section 362 of the Bankruptcy Code, which halts collection efforts, repossession attempts, and pending lawsuits against the debtor. The automatic stay provides breathing room for the debtor to assess its financial situation, negotiate with creditors, and develop a restructuring strategy without the pressure of ongoing collection activity.

First-day motions. The debtor filed four first-day motions on January 6, 2026, seeking immediate relief to continue business operations:

The Cash Collateral Motion (Docket #2) seeks authorization to use cash collateral while providing adequate protection to secured creditors. The motion includes supporting declarations from William Butler, Mike Pappas, and Joshua Teeple. Cash collateral typically includes cash, deposit accounts, and receivables in which a secured creditor holds an interest.

The Bank Accounts Motion (Docket #3) seeks authorization to maintain the company's existing bank accounts, a routine first-day motion that allows debtors to continue using established banking relationships rather than opening new debtor-in-possession accounts.

The Employee Wages Motion (Docket #4) seeks authorization to pay prepetition employee wages and related obligations. Under the Bankruptcy Code, employee wage claims up to certain statutory limits receive priority treatment, meaning they are paid ahead of general unsecured creditors. For a company with approximately 17-20 employees, maintaining workforce continuity is essential to preserving the value of the business and completing any ongoing projects. Construction contractors rely on skilled tradespeople who may seek alternative employment if wages are delayed, making timely payment authorization a standard first-day request.

The Utilities Motion (Docket #5) seeks an order prohibiting utility providers from discontinuing services to the debtor. Under Section 366 of the Bankruptcy Code, utility providers cannot alter, refuse, or discontinue service to a debtor solely based on the bankruptcy filing, provided adequate assurance of future payment is established.

First Day Declaration. As of January 7, 2026, the debtor has not filed a First Day Declaration. This document, when filed, typically provides detailed information about the company's business operations, financial history, causes of distress, capital structure, major creditors, and restructuring objectives. The absence of a First Day Declaration at filing is notable, as many chapter 11 debtors file this explanatory document concurrently with their petitions.

Schedules and statements. The debtor's schedules and Statement of Financial Affairs are due January 20, 2026. These filings will disclose the company's assets, liabilities, contracts, leases, financial transactions, and creditor information. Until these documents are filed, the exact scope of the company's financial position remains undisclosed.

Key deadlines. The following deadlines apply to the case:

Event	Date
Petition Date	January 6, 2026
Schedules and Statements Due	January 20, 2026
Statement of Financial Affairs Due	January 20, 2026
List of Equity Security Holders Due	January 20, 2026
Status Hearing	February 3, 2026
341 Meeting of Creditors	February 4, 2026 (telephonic)

Industry Context

California construction market. The Pappas Piping Services bankruptcy filing occurred amid mixed conditions in California's construction industry. According to Construction Owners, commercial construction in California declined 14.8% in 2024 due to economic uncertainty and high interest rates. Private development has slowed due to fluctuating market conditions, though public construction remains robust, supported by voter-approved initiatives including Proposition 1 (behavioral health treatment centers) and Proposition 2 (K-12 school and community college facility upgrades).

The JLK Rosenberger 2025 California Construction Industry Forecast projects overall construction activity in California to increase 6.5% in 2025, with the civil construction sector projected for 22.6% growth driven by roads and water/sewer treatment projects. California is expected to receive $53.9 billion through the Infrastructure Investment and Jobs Act (IIJA), with $33.5 billion already distributed to the state. Additionally, California voters approved $59 billion in school funding measures in November 2024, nearly 50% higher than the previous record of approximately $40 billion in 2016.

Despite these positive indicators in public sector construction, the forecast identifies challenges including higher interest rates, labor shortages, and potential inflation. The January 2025 Los Angeles wildfires added uncertainty to the statewide construction outlook, with JLK Rosenberger estimating economic losses of $250-275 billion from the fires. The reconstruction effort may eventually generate construction activity, but the immediate impact has been market disruption and uncertainty.

The OpenPR California Commercial Building Market analysis projects the California commercial building industry to grow from $154.86 billion in 2025 to $198.85 billion by 2035, representing a compound annual growth rate of 2.53%. Metropolitan regions including Los Angeles, San Francisco, San Diego, and San Jose continue to attract residents and businesses, fueling long-term demand for office spaces, retail centers, and commercial hubs. However, the near-term construction environment remains challenging for contractors dependent on private commercial work.

Bay Area employment trends. The San Francisco Bay Area construction market has been particularly challenging. According to The Real Deal, San Jose construction employment "barely budged" during 2025, while employment declined in Oakland, Fremont, and Berkeley. The San Francisco-San Mateo-Redwood City metro area added approximately 1,200 construction jobs (a 3% gain) from September 2024 to September 2025, but the region underperformed relative to national trends.

The report notes that private commercial and market-rate multifamily construction "has been scarce" in the Bay Area, with the national growth in construction employment concentrated in infrastructure, manufacturing, and data-center projects rather than coastal housing markets. Hospital projects and public-sector work provided some stability, including a $176 million health campus completion in San Mateo County. Despite zoning, permitting, and environmental reforms, developers report these changes "have yet to translate into enough shovel-ready work to buoy hiring numbers."

The East Bay Times reported that San Jose and Bay Area commercial real estate faced difficulties in 2024, with office, hotel, and apartment properties experiencing widening loan defaults and foreclosures. The region's office market has been particularly affected by remote work trends, with vacancy rates elevated across downtown San Jose and other commercial districts. While technology sector leasing activity has emerged as a positive indicator, the sector's challenges have reduced demand for commercial construction services, including tenant improvement projects that represent a significant portion of work for mechanical subcontractors.

Mechanical contracting conditions. Specialty contractors like Pappas Piping Services, which provide plumbing and HVAC services for commercial projects, are particularly exposed to commercial construction activity levels. The Blue Book profile indicates the company's commercial work experience includes hotels and office buildings, property types identified as struggling in the Bay Area market. The company's focus on design/build piping services suggests involvement in projects requiring engineering and fabrication capabilities, which may carry higher fixed costs than simpler service and repair work.

According to Construction Owners, California faces skilled labor shortage challenges, and national construction unemployment stands at 3.7%. The construction industry experienced 3.0% job growth over the past year nationally, but this growth has not been evenly distributed across markets or contractor types. The report also identifies supply chain disruptions affecting electrical materials for data centers and electrification projects, along with copper, steel, and nickel price volatility impacting project timelines. For plumbing contractors, copper pipe prices are a significant cost driver, and price fluctuations can erode margins on fixed-price contracts bid months before work begins.

Material price volatility creates particular challenges for mechanical contractors. Projects bid during periods of lower material costs may become unprofitable when prices spike during construction. Contractors who lack the scale or financial reserves to hedge material costs or secure favorable supplier terms face margin compression when material prices rise between bid submission and project completion.

Construction bankruptcy trends. The construction industry has experienced elevated bankruptcy filings nationally. According to the NACM Commercial Services analysis, chapter 11 commercial bankruptcy filings increased 72% in 2023 compared to 2022, with specialist contractor insolvency rising at the highest year-over-year rate. Cash flow is cited as the most common cause of construction company bankruptcy, with underbidding to maintain workflow squeezing contractors already dealing with labor and supply shortages.

The cash flow challenges facing construction contractors stem from the industry's payment structure. Contractors typically must pay for labor, materials, and equipment before receiving payment from project owners or general contractors. Payment terms in construction often extend 30 to 90 days or longer, and disputes over change orders, punch list items, or project completion can delay payment further. When multiple projects experience payment delays simultaneously, even profitable contractors can face liquidity crises.

A 2022 Levelset analysis of California construction bankruptcies noted that construction bankruptcy had reached its highest level in almost ten years, with several contractors reporting revenues of less than $500,000 filing for bankruptcy protection. Contributing factors included supply chain disruptions, labor challenges, and higher material prices. The analysis documented multiple California contractors entering bankruptcy during this period, reflecting the cumulative impact of industry headwinds.

Impact on stakeholders. Smith Debnam Law notes that construction company bankruptcies significantly affect owners, general contractors, subcontractors, and suppliers. The automatic stay immediately prohibits creditors from initiating or continuing actions to collect or enforce debts. Secured creditors typically recover more than unsecured creditors, and in "no-asset Chapter 7 cases," unpaid suppliers and subcontractors often receive nothing.

For creditors with exposure to construction debtors, the law firm notes that mechanics' liens must be perfected before or immediately after bankruptcy filing to preserve priority status. Failure to properly perfect liens through bankruptcy procedures may result in losing priority status or claim recovery.

Pending Information

Financial position. The company's financial position remains undisclosed pending the filing of schedules and the First Day Declaration. Key information that will become available includes:

Total assets and liabilities at the petition date remain unreported. The schedules will disclose the company's equipment, vehicles, accounts receivable, inventory, and other assets, along with secured and unsecured debt. The company's annual revenue, profitability history, and cash position at filing will be detailed in the First Day Declaration.

Capital structure. The identity of the secured creditor referenced in the Cash Collateral Motion has not been disclosed in publicly available documents. The schedules will include a list of the 20 largest unsecured creditors, which typically includes trade creditors, equipment lessors, and service providers. Any prepetition financing arrangements will also be disclosed.

Causes of distress. The specific factors leading to the bankruptcy filing have not been disclosed. The First Day Declaration typically explains the circumstances leading to the filing, which may include industry conditions, specific business challenges, liquidity events, or other factors. Without this document, the reasons for the filing remain undetermined.

Restructuring objectives. Whether the company intends to reorganize as a going concern, pursue a sale of assets, or liquidate has not been disclosed. The first-day motions suggest an intent to continue operations at least in the near term, but the ultimate restructuring strategy will become clearer as the case progresses.

Construction Bankruptcy Considerations

Project impact. When a contractor files bankruptcy, active construction projects face potential disruption. Owners and general contractors may need to evaluate project status, assess completion alternatives, and address payment obligations. Subcontractors and suppliers with outstanding invoices become unsecured creditors and must file proofs of claim to participate in any distribution.

For a mechanical subcontractor like Pappas Piping Services, the company's work on any active projects may be subject to assumption or rejection under Section 365 of the Bankruptcy Code. If the debtor has uncompleted work under executory contracts with general contractors or project owners, those counterparties face uncertainty about project completion until the debtor decides whether to assume or reject those contracts.

Adequate protection. The Cash Collateral Motion filed by Pappas Piping Services references adequate protection for secured creditors. Adequate protection typically includes replacement liens, cash payments, or other arrangements to protect a secured creditor's interest in collateral while the debtor uses that collateral during the bankruptcy case.

For construction contractors, cash collateral often includes accounts receivable from completed or in-progress projects. The secured creditor, typically a bank or asset-based lender, holds a security interest in these receivables and must receive adequate protection before the debtor can use the collections to fund ongoing operations. Common adequate protection arrangements include periodic payments, maintenance of collateral value, and reporting requirements.

Small business debtor considerations. With approximately 17-20 employees and a project range up to $2 million, Pappas Piping Services would appear to qualify as a small business debtor. If the company elects small business debtor status under Subchapter V of chapter 11, different procedural requirements would apply, including expedited timelines and modified plan confirmation standards. The company's election, if any, has not been disclosed.

Subchapter V cases proceed on a compressed timeline compared to traditional chapter 11 cases. A Subchapter V trustee is appointed to oversee the case and facilitate plan confirmation. The debtor must file a plan within 90 days of the petition date (subject to extension), and creditors do not vote on the plan. These streamlined procedures are designed to reduce costs and increase reorganization success rates for smaller businesses.

Bonding and licensing. For licensed contractors like Pappas Piping Services, bankruptcy filing can affect bonding capacity and licensing status. The company's $15,000 contractor bond with American Contractors Indemnity Company provides some protection to project owners and subcontractors, but this amount is modest relative to the company's maximum project size of $2 million. The California Contractors State License Board monitors licensed contractors' financial condition, and significant adverse events may trigger license review.

The company's contractor license (#856558) remains active with an expiration date of March 31, 2027. Maintaining this license is essential for the company's ability to continue operations and complete any reorganization as a going concern.

Frequently Asked Questions

What does Pappas Piping Services do?

Pappas Piping Services, Inc. is a specialty mechanical contractor based in San Jose, California, providing plumbing, HVAC, and mechanical contracting services. The company handles projects ranging from $1,000 residential repairs to commercial renovations exceeding $2 million, serving 10 Northern California counties including San Francisco, Oakland, San Jose, and Palo Alto.

When did Pappas Piping Services file for bankruptcy?

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

How many employees work at Pappas Piping Services?

Based on available sources, the company employs approximately 17-20 people. An NLRB case in 2013 identified 17 employees in a proposed bargaining unit, while current business databases estimate approximately 20 employees.

What first-day motions were filed?

The debtor filed four first-day motions on January 6, 2026: (1) a Cash Collateral Motion seeking authority to use prepetition cash while providing adequate protection to secured creditors, (2) a Bank Accounts Motion to maintain existing accounts, (3) an Employee Wages Motion to pay prepetition wages, and (4) a Utilities Motion to prevent service discontinuation.

What caused the bankruptcy filing?

The specific causes of financial distress have not been disclosed. A First Day Declaration, which typically provides this information, has not yet been filed. The filing comes amid a weak Bay Area construction market, with San Jose construction employment stagnant and private commercial work scarce in the region.

Is Pappas Piping Services unionized?

No. The company operates as a non-union contractor. In 2013-2014, the United Association of Plumbers, Steamfitters & Refrigeration Fitters (Local 393) filed a representation petition with the NLRB, but the union withdrew the petition before an election was held.

What is the company's licensing status?

Pappas Piping Services holds California Contractors State License Board License #856558 for plumbing, which is active and expires March 31, 2027. The company maintains a $15,000 contractor bond with American Contractors Indemnity Company.

When are the schedules and financial statements due?

Schedules and Statements of Financial Affairs are due January 20, 2026. These filings will disclose the company's assets, liabilities, creditors, and recent financial transactions.

What are the options for creditors owed money by Pappas Piping Services?

Creditors should monitor the case docket and file proofs of claim by the applicable deadline once established. Secured creditors with perfected liens have priority over unsecured creditors. Trade creditors and suppliers become general unsecured creditors and should consult with bankruptcy counsel about claim filing procedures and any lien rights.

Who is the claims agent for Pappas Piping Services?

A claims agent has not yet been appointed. This information will be updated when the court enters an order appointing a claims and noticing agent. In smaller chapter 11 cases, particularly 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.