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Crain Daughters Sue Stepmother, Allege Mismanagement of Transport Firm

3 min read

The messy legal battle between the daughters of the late Fort Smith businessman H.C. “Dude” Crain Jr. and their stepmother has a new chapter.

In the latest federal lawsuit, Crain’s four daughters allege that their stepmother, Shirley Crain, has breached her fiduciary duty in the way she is running Airport Transportation Co. of Bentonville.

The daughters said they have asked for the company’s books to no avail. And since the first quarter of 2022, the company, “at Shirley’s instruction,” has refused to issue profits to the daughters, forcing them to pay taxes on undistributed money, the suit says.

The daughters are asking that a temporary receiver be appointed. “Through her actions, Shirley has used the Western District of Arkansas’ award of ATC stock as a weapon to harm Plaintiffs instead of an asset to benefit them,” according to the suit, which was filed June 6 in U.S. District Court for the Western District.

Shirley Crain is the sole officer and owns 55% of Airport Transportation, which operates fuel tankers that deliver airline fuel to northwest Arkansas. The daughters, Lisa Crain, Cathee Crain, Marillyn Crain Brody and Kristan Crain Snell, all of Texas, were awarded the other 45% in January 2022 thanks to a separate lawsuit.

In 2020, the daughters sued Shirley Crain for failing to hand over half of their father’s estate. That case resulted in the daughters receiving about $90 million last year.

Dude Crain owned Crain Industries Inc., maker of polyurethane foam and polyester fiber items. The company, with reported revenue of $154 million in 1990, was sold in 1995 for $130 million.

When Dude Crain died in 2017, his assets were worth about $200 million. Before his daughters sued her in 2020, Shirley Crain sold or exchanged several of the assets.

Between 2016 and 2019, ATC paid distributions of $1.7 million for shipping fuel, according to the lawsuit. ATC reported a loss of $23,444 in 2020 due to the impact of COVID. The daughters said they believe the company has had profits since then. In August 2023, the daughters asked for the company’s records, including the financial statements.

On Sept. 20, Shirley Crain’s attorney said in an email that she had not issued any dividends since January 2022, according to the lawsuit. But Shirley Crain hasn’t provided any of the company records that the daughters requested.

The daughters want proof. “Shirley has a history of converting corporate profits to herself in lieu of distributing profits to all shareholders,” the lawsuit said.
In yet another lawsuit, the daughters sued Shirley Crain in Benton County Circuit Court in 2020 over another company they owned together — Regional Jet Center Inc.

Shirley Crain had to repay Regional Jet Center $1.4 million for “consulting fees” she paid herself, the lawsuit said. She also had to repay the company another $92,589 for personal travel expenses she “improperly charged” to the company, the lawsuit said.

“Considering Shirley’s history of converting corporate funds, the Plaintiffs were more than justified in demanding financial records from ATC,” the lawsuit said.
The plaintiffs also want a judgment saying that Shirley Crain’s actions, “as controlling director, are illegal and oppressive and warrant the dissolution and liquidation of ATC,” the lawsuit said.

The Crain daughters are represented by attorneys Tim Hutchinson and Seth Haines of RMP LLP’s office in Springdale.

Christopher Blaesing of Bryan Cave Leighton Paisner LLP of St. Louis, one of Shirley Crain’s attorneys in a previous lawsuit, declined to say if he represented her in the ATC case.

The case has been assigned to U.S. District Judge Timothy L. Brooks.

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