Johnson & Johnson (J&J) adopted its controversial strategy for battling cancer claims tied to baby powder after a $2 billion court loss sparked concern that the company's perfect credit rating could be damaged by the growing number of similar lawsuits, a retired J&J treasurer testified.

Michelle Ryan exchanged emails with credit rating firms previewing the company's bankruptcy options last year, before the court strategy was implemented, according to records shown Tuesday in a federal trial on whether that tactic is legitimate. Through the maneuver, J&J shunted all its baby-powder liabilities into a separate unit and then put that entity in bankruptcy.

Victims suing J&J have asked U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey to dismiss the Chapter 11 filing of the unit, LTL Management, arguing that case wrongly manipulates the bankruptcy system.