[BUG] Claude Code hangs after update on 28 feb 2026

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

on startup after auto-update (Feb 28 2026) due to settings.local.json
Environment:

• Claude Code: Updated automatically on 2026-02-28 at ~17:27 UTC
• OS: Windows Server 2022 Standard (10.0.20348)
• Shell: cmd.exe
• .NET 9.0 MCP server (ModelContextProtocol C# SDK)

Description:
After today's auto-update, Claude Code hangs indefinitely on startup when the project's .claude/settings.local.json contains certain
previously-valid settings. No error message is shown — the process simply hangs with no output. The same configuration worked fine earlier in the
day before the update.

Steps to reproduce:

1. Have a .claude/settings.local.json in a project directory containing enableAllProjectMcpServers: true and/or additionalDirectories with //C:/

path prefixes (both were previously written/accepted by Claude Code itself)

1. Run claude.exe from that project directory
2. Claude hangs — blank screen, no output, no error

Working settings.local.json (after fix):
{
"permissions": {
"allow": ["Bash", "Edit", "Write", "WebFetch", "WebSearch", "NotebookEdit",
"mcp__xacli__xacli_sql", ...
],
"additionalDirectories": [
"C:/Users/administrator.DEV/",
"C:/Windows/Temp/",
"C:/temp/"
]
},
"enabledMcpjsonServers": ["xacli"]
}

Hanging settings.local.json (original, previously working):
{
"permissions": {
"allow": ["Bash", "Edit", "Write", ...],
"additionalDirectories": [
"//C:/Users/administrator.DEV/",
"//C:/Windows/Temp/",
"//C:/temp/"
]
},
"enableAllProjectMcpServers": true,
"enabledMcpjsonServers": ["xacli"]
}

Debugging performed:

• Confirmed git operations work fine in the directory
• Confirmed the MCP server (xacli) works correctly — responds to initialize, tools/list, and tool calls
• Renamed .mcp.json — still hangs (not the MCP server itself)
• Renamed .claude directory — starts successfully
• Replaced settings.local.json with {} — starts successfully
• Progressively re-added settings to identify the trigger

Root cause (likely):
The enableAllProjectMcpServers: true setting and/or //C:/ path prefix format in additionalDirectories causes the new Claude Code version to hang
during startup. Both of these values were written by Claude Code itself in prior sessions.

Workaround:
Replace .claude/settings.local.json with {} and let Claude Code re-create settings from scratch. Avoid enableAllProjectMcpServers: true — use
enabledMcpjsonServers to explicitly list servers instead. Use C:/ paths instead of //C:/ in additionalDirectories.

Impact:
Complete blocker — Claude Code is unusable in any project that has these settings until manually fixed. No error message is shown, making diagnosis
extremely difficult. Approximately 2 hours of debugging time and significant token usage to identify.

---
You can file this at https://github.com/anthropics/claude-code/issues

What Should Happen?

Claude code should not hang

Error Messages/Logs

There's no output, claude code just hangs before any output occurs. Claude.exe update was still useable. Claude code was start-able from the default folder so I could get it to work through this problem - 2 hours later it found the answer as documented in this thread

Steps to Reproduce

Start claude.exe - just hangs

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

prior to today it worked

Claude Code Version

2.1.63 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Other

Additional Information

_No response_