The drama surrounding Foundry Literary + Media does not look to be ending anytime soon. The acrimonious split of the firm's former co-founders, which saw one principal file suit against the other in January, has now resulted in a legal response.

In January, Foundry co-founder Peter McGuigan filed a lawsuit against his former partner, Yfat Reiss Gendell, claiming Gendell was siphoning money from the firm. Now, Gendell has hit back with her a legal response, which features a number of counterclaims, including the main one, that the dispute "arises after years of inattentiveness, incompetence, as well as unprofessional and abusive behavior" on the part of McGuigan.

McGuigan's suit came after the pair had parted ways professionally, with him going on to launch Ultra Literary and her starting YRG Partners. The suit also came after complaints had surfaced from Foundry authors claiming they were owed unpaid royalties.

The lawsuit McGuigan filed alleges, among other things, that Gendell withdrew over $600,000 from Foundry's operating account between January 2020 and November 2021 and used the funds for personal purposes. McGuigan also alleges that Gendell took out over $180,000 more from the same account to fund the launch of her new agency.

Gendell's response, filed in New York's supreme court, paints a different picture, portraying her as someone forced to start her own venture as a result of McGuigan's erratic behavior and inattention to the business. The response states: "Bruised and panicked about his own professional and financial future without Ms. Gendell, Mr. McGuigan lashed out. He fired Foundry employees he perceived to be loyal to Ms. Gendell and berated others until they resigned."

The response from Gendell claims McGuigan, who had left the financial running of the company to Gendell, caused the financial issues that enveloped Foundry when he abruptly froze the company's operating account. Gendell goes on to claim that, when prroblems arose from that decision, McGuigan filed his lawsuit.

As Gendell's counterclaim states: "When authors, agents, and others complained that Foundry was not meeting its contractual obligations, Mr. McGuigan sought to retroactively justify his freezing of the Foundry accounts by falsely accusing Ms. Gendell of stealing from Foundry." Gendell's suit states that in point of fact, "Foundry had more than enough funds to pay authors and agents."

In addition to file the January lawsuit, Gendell's response accuses McGuigan of orchestrating a smear campaign against her, with the complaint noting that McGuigan and Foundry "must be held liable and make Ms. Gendell whole for their malicious smear campaign, intentional infliction of harm, and breaches of contract."

Both Gendell and McGuigan declined to comment on the lawsuit.