A group of talc liability claimants on Wednesday asked the Second Circuit to find reorganized cosmetics company Revlon has to pay out for their injury claims despite those claims being filed past the deadline in the company's Chapter 11 case.

In oral arguments before a three-judge panel, counsel for the claimants and the reorganized Revlon sparred over whether bankruptcy law demands that debtors accept future asbestos claims or if it's a choice they have when setting up their restructuring plans.

The 42 appellants — who all say they were exposed to asbestos in talc products sold by Revlon prior to its 2022 bankruptcy but were diagnosed with asbestos-caused illnesses after the case was filed, and who filed claims after the claims deadline in the Chapter 11 case — were seeking to reverse an August 2024 bankruptcy court's ruling that they are time-barred from asserting claims against the reorganized Revlon.

Appellant counsel David Frederick argued that debtors with asbestos liability are required to file plans that conform with Section 524(g) of the Bankruptcy Code — which outlines the rules for debtors to establish trust funds to pay future asbestos claims with no deadline — as a matter of due process, since asbestos-caused illnesses may emerge decades after exposure.

Revlon counsel Kannon Shanmugam, however, argued the law does not mandate this, noting the same bankruptcy court previously approved a Chapter 11 plan for Energy Future Holdings in 2017 that included a bar date for asbestos claims.

"Every single textual clue in this statute [indicates] this is an option and not mandatory," he said.

Frederick responded that if assuming future claims liability is optional, there is no reason a debtor would do so, going back to Johns Manville Corp.'s bankruptcy, the first to establish a trust to pay future asbestos claims.

"Johns Manville didn't have to do that. It just had to use 524(a) and wipe the slate clean of tens of millions in claims," he said.

The parties also argued on whether the late claimants had received sufficient notice of the claims deadline, with Frederick arguing it was insufficiently specific.

"This was one of the worst notices in the history of bankruptcy," he said.

Shanmugam argued the notice was a standard one for bankruptcy cases with potentially unknown claimants that contained sufficient information, particularly in light of the substantial publicity around talc claims.

"This is not a circumstance in which an individual who had exposure would have no idea they have a claim," he said.

Circuit Judges Amalya L. Kearse and Eunice C. Lee along with U.S. District Court Judge Eric R. Komitee sat on the panel for the Second Circuit.

The claimants are represented by David C. Frederick, Matthew N. Drecun and Jared M. Stehle of Kellogg Hansen Todd Figel & Frederick PLLC and Kevin C. Maclay, James P. Wehner, Todd E. Phillips, Lucas H. Self and Ariel K. Hayes of Caplin & Drysdale Chtd.

Revlon is represented by Kannon K. Shanmugam, William T. Marks, Jamie Durling, Robert A. Britton, Paul A. Paterson and Kathleen H. Pierre of Paul Weiss Rifkind Wharton & Garrison LLP.

The case is In re: RML LLC, case number 25-263, in the U.S. Court of Appeals for the Second Circuit.