[BUG] Server busy error - Failed to start Claude workspace / Can't reach the Claude API from Claude's workspace

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?

When I access Cowork the app freezes and keeps saying "Server is busy" until it stops with the mesage Unable to connect to API / connection refused

What Should Happen?

Claude Cowork should be working properly

Error Messages/Logs

Steps to Reproduce

1 Launch the Claude app
2 Access Cowork
3) Start a new task
4 Write a prompt

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

1.1.9669

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_