How do I prevent kernel panics and failures on my MacBook with a Thunderbolt display connected?

My MacBook Pro (15-inch, 2017) running macOS Catalina 10.15.6 (19G73) will inevitably kernel panic while in sleep mode when my external display (LG Ultrawide 34UC98-W) is connected via an Apple Thunderbolt USB-C to Thunderbolt 2 adapter.

The issue appeared a few weeks ago and since then has become a daily occurrence. I am able to disconnect my external display from power via a smart plug but I generally forget to, and when I do I end up coming back to a MacBook that has panicked and restarted.

More recently, my MacBook has started waking from sleep correctly but not detecting the external display anymore. This is even more frustrating because no amount of fiddling with the cable or the settings will fix this. Only a restart will cause the MacBook to detect the screen again.

What can I do to stop these issues from occurring?

EDIT: Here is an example panic log.