Ken Griffin’s hedge fund Citadel has been entangled in the collapse of Spirit Aviation Holdings Inc. over two years. The fund bought distressed debt and equity in the low‑cost carrier, hoping a restructuring would spark a rebound, but recent filings show the bet has turned sour, eroding returns for investors and drawing regulator scrutiny.

The partnership unraveled earlier this year when Citadel dismissed a senior portfolio manager who oversaw the Spirit position. The departure followed a string of losses tied to the airline’s failed financing plan, mounting creditor claims, and raised concerns over risk controls. Analysts say the fallout underscores the perils of chasing high‑yield distressed assets amid volatile markets.

A fresh wrinkle appears as Congress debates a broad US rescue plan that could reshape airline financing structures. If passed, the legislation may alter the recovery hierarchy for creditors like Citadel, adding uncertainty to any eventual payout from Spirit’s bankruptcy estate. Investors will watch how the fund reallocates capital amid the uncertainty.