[BUG] claude --continue freezes

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?

Start a session with existing context and not so small history with claude --continue

What Should Happen?

Claude should load context and start up. Some wait time is expected.

Error Messages/Logs

Steps to Reproduce

Start a session with existing context and not so small history with claude --continue
It freezes completely and stays that way.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

1.0.109 (Claude Code)

Claude Code Version

1.0.111 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

May be related to #7424