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redeyechicago.com

Co-founder of 5 Rabbit leaves company amid legal skirmish

By Josh Noel

Tribune Newspapers

3:47 PM CST, February 21, 2013

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An ugly battle in Chicago's blooming craft beer landscape has come to a partial conclusion, with one of 5 Rabbit Cerveceria's two founding partners agreeing to leave the company.

Isaac Showaki has sold his stake in the brewery after months of contentious wrangling with former partner Andres Araya, which has included two defamation suits filed against Showaki since the start of the year. Both suits — one brought by Araya and another by a former 5 Rabbit intern — remain active.

"A lot of things have happened in the last few months, and even though we have come to an agreement regarding the future of the company, that didn't include a broader agreement on other things," Araya said this afternoon.

Showaki said he made an offer to buy the company, but that "to force a resolution, this was the only way."

"Everyone knew about the litigation and the fight, and that's not good for any company," Showaki said. "I want to move forward and do what's best for me and the company because I still have people involved. I want to see my friends and family get paid and do well."

(Showaki said two of his friends and an uncle remain investors in the company. His ownership stake is being taken over by Cesar Garza, a friend of Araya's from college who is moving from Monterrey, Mexico, to handle the company's sales and marketing.)

Though tensions between Showaki and Araya have simmered since last fall, the first public indication of trouble came in early January, when Araya sued his former partner in Cook County circuit court. In the suit, Araya alleges that Showaki told multiple people that Araya had stolen money from the brewery — including $25,000 from a recent investor — and that he had had an extra-marital affair with a brewery intern.

According to Araya's lawsuit, "Showaki became increasingly obsessed with his perceived lack of power and influence at the company" and began "a campaign to tarnish and besmirch Araya's reputation in an effort to acquire control of the company."

Araya filed suit against Showaki on Jan. 7. Represented by the same law firm as Araya, Sonia Anacleto, the brewery intern, filed a separate defamation suit against Showaki four days later that echoed many of Araya's allegations. Both are asking for awards in excess of $100,000.

Showaki declined to discuss the litigation.

"I can't say much because it's still pending," he said.

Araya said he stands by the lawsuit: "We know the future of the company, but that doesn't mean the rest has been settled."

"We worked hard for a few years together, but as happens to many partnerships, things fall apart," he said. "It would have been hard to continue like this without the company suffering."

5 Rabbit launched in 2011 with a novel concept — the nation's first Latin-themed craft brewery — and an embrace from the craft beer world that included two medals from the highly-regarded Great American Beer Festival in Denver.

Despite the brewery's recent troubles, 5 Rabbit has ambitious plans for the next several months, said Randy Mosher, a minority owner and famed beer expert who is staying on with the company.

Its winter seasonal, Huitzi (which we profiled upon its release last year) will be available next week in 750 milliliter bottles. Up next will be a spring beer, Missionario, that Mosher described as a "strongish wheat beer with wine grapes and each year, a specialty ingredient." This year that extra ingredient will be almonds, but future batches could feature pears, apricots, figs, dates "or any of the things Spanish missionaries would have brought with them and had in their gardens."

This summer, 5 Rabbit plans to release a series of beers it is calling Paletas, named for the frozen pops often sold as street food in Hispanic neighborhoods. Paletas will be a series of draft-only low-alcohol wheat beers that will each feature a different fruit and spice component.

"It will be a matter of how many we can get through between May and September," Mosher said. "You never know if it will be cucumber-mint or black walnut-raspberry or watermelon with Tasmanian pepper berry."

The brewery also hopes to launch a series of beers using wild-harvested fruits and nuts from the Amazon and parts of the Caribbean or Mexico.

Though a distraction, Mosher said, the legal wrangling came at the right time: after the new brewery was built.

"If this happened before we pulled the trigger on buying equipment or construction, that could have been an enormous problem," Mosher said. "We basically had everything in place when it started and had enough money in the bank to tie up loose ends. There's never a good time for things to happen like this, but if it's going to happen, this was the time."

jbnoel@tribune.com

Twitter @traveljosh