Bike Rack Brewing lawsuits

Brewery owners file counterclaim against co-founder.

The owners of Bentonville-based Bike Rack Brewing Co. have filed a counterclaim against one of their own, contending he betrayed their confidence by derailing a company plan to expand to Fort Smith and refused a legitimate buyout attempt that’s stipulated through the brewery’s operating agreement.

In a filing in Benton County Circuit Court on Wednesday, Bike Rack’s owners denied claims they were trying for force out fellow owner Steven Outain with a low-ball offer. They also filed a counterclaim, arguing Outain used confidential company information to derail a Fort Smith expansion and that he’s breaching his contract by refusing a valid termination offer.

Bike Rack’s owners include Jeff Charlson with a 54 percent stake in the brewery; Andy Neilsen holds 20 percent; Joey Lange controls 11 percent; while Jeff Amerine and Rickey Draehn each own 6 percent of the company, and Phyllis Amerine owns 3 percent, according to court documents filed on Wednesday.

In mid-September Steven Outain, a company founder and its chief development officer with a 17 percent share in the brewery, filed suit in Benton County Circuit Court contending his relationship with the other owners has deteriorated. Outain asked,

● among other things, that the court determine the worth of his share of the company, rule that he can’t be forced out and award compensatory and punitive damages.

According to the September filing, the other owners threatened Outain with lawsuits and demanded he voluntarily relinquish his ownership interest in the company but later dropped the demand and instead offered to buy him out by using a “call right” provision under the brewery’s operating agreement, an offer Outain rejected because he contended it undervalued his share.

In the counterclaim this week, the other owners said an initial buyout offer they made to Outain was proper under the company’s operating agreement. They further stated when Outain rejected that offer, they determined the company’s fair market value of $105,900 based on the conditions spelled out in the agreement and offered him $18,003, the value of his share. Bike Rack’s owners noted in the filing while the company did see annual revenue of more than $800,000 in its fiscal 2017, the operating expenses at the time were even greater.

The counter-suit also says Bike Rack had plans, with the backing of a “unique investor group”, to open a food and

entertainment location in Fort Smith that would have included production equipment that would double the brewery’s current capacity, thereby helping cut costs and increase profits. The owners contend Outain, using confidential information, began representing a direct competitor in communications with the investor group, costing Bike Rack the deal and benefiting himself.

Bike Rack opened its brewery and taproom in Bentonville in 2014, added a second location in Bentonville in 2017 and is in the process of opening a third location in downtown Springdale.

In 2017 Bike Rack produced 1,488 barrels of beer, about 4 percent of Arkansas’

total beer production and up from 579 barrels in 2016, according to data from the state’s Alcoholic Beverage Control Division. A barrel of beer contains 31 gallons.