Citadel LLC, a hedge fund founded by billionaire investor Ken Griffin, recently lost Barrett Eynon, a portfolio manager focused on investing in distressed debt, as well as a few members of Mr. Eynon’s team, according to people familiar with the matter.

Since Mr. Eynon’s departure several weeks ago, Citadel has unwound its positions in the distressed debt of companies such as Breitburn Energy Partners LP, coal miner Murray Energy Corp. and Windstream Services LLC, people with knowledge of the matter said. The selloff was completed...