Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Tuesday, January 27. In today's briefing, Kirkland & Ellis stepped back from a controversial liability-management deal that had its clients on both sides; First Brands Group began a partial liquidation; and restaurant owner FAT Brands filed chapter 11.

Kirkland withdraws from representing Optimum. Kirkland & Ellis is withdrawing as counsel to Optimum Communications after the telecom company filed an antitrust lawsuit against lenders that are also among the law firm’s clientele in the asset-management industry.

Optimum last year sued eight asset managers, many of which Kirkland also counts as clients, to allege that they formed an illegal cartel to lock the company out of U.S. credit markets. While another law firm filed the complaint, some of those named as defendants have nonetheless associated it with Kirkland because the firm represented Optimum on creditor negotiations and financing transactions.

• “Kirkland was being associated with the litigation even though the firm served as transaction counsel, not litigation counsel, so the firm did this to dissociate from the lawsuit,” said a person familiar with Kirkland. “The firm will continue their liability management practice but will do so in ways consistent with market practices, in contrast to hyperaggressive tactics.”

FAT Brands files chapter 11. The owner of Fatburger and Johnny Rockets filed for bankruptcy, saying it would use the chapter 11 process to deleverage its balance sheet and support the continued growth of its brands.

FAT Brands listed over $1 billion in assets and liabilities in its filing with the U.S. Bankruptcy Court in Houston. The company was sued last week by a Jefferies Group-backed investment fund for an alleged debt default on one tranche of bonds. FAT Brands has also been locked in litigation with bondholder Alagna Advisors.

“We plan to use this process to connect with key stakeholders around a value-maximizing plan," said CEO Andy Wiederhorn, who was reinstated to the role last year after the Justice Department dropped criminal fraud charges against him.

• Share moves: FAT Brands, Twin Hospitality Shares Slide Premarket on Bankruptcy Filings
• Earlier: Jefferies-Backed Fund Sues FAT Brands Over Alleged Debt Default

CVC buys U.S. credit manager Marathon for up to initial $1.2 billion. The Amsterdam-listed buyout group said Monday that the acquisition would materially broaden its credit offering and boost its ability to scale and serve clients across institutional, private wealth and insurance channels. Marathon will be re-branded as CVC-Marathon.

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