diff --git a/apps/server/dispatch/manager.ts b/apps/server/dispatch/manager.ts
index 0d87e9d..6ea5425 100644
--- a/apps/server/dispatch/manager.ts
+++ b/apps/server/dispatch/manager.ts
@@ -15,7 +15,7 @@ import type {
   TaskDispatchedEvent,
   TaskPendingApprovalEvent,
 } from '../events/index.js';
-import type { AgentManager, AgentResult } from '../agent/types.js';
+import type { AgentManager, AgentResult, AgentInfo } from '../agent/types.js';
 import type { TaskRepository } from '../db/repositories/task-repository.js';
 import type { MessageRepository } from '../db/repositories/message-repository.js';
 import type { AgentRepository } from '../db/repositories/agent-repository.js';
@@ -397,15 +397,23 @@ export class DefaultDispatchManager implements DispatchManager {
     }
 
     // Spawn agent with task (alias auto-generated by agent manager)
-    const agent = await this.agentManager.spawn({
-      taskId: nextTask.taskId,
-      initiativeId: task.initiativeId ?? undefined,
-      phaseId: task.phaseId ?? undefined,
-      prompt: buildExecutePrompt(task.description || task.name),
-      baseBranch,
-      branchName,
-      inputContext,
-    });
+    let agent: AgentInfo;
+    try {
+      agent = await this.agentManager.spawn({
+        taskId: nextTask.taskId,
+        initiativeId: task.initiativeId ?? undefined,
+        phaseId: task.phaseId ?? undefined,
+        prompt: buildExecutePrompt(task.description || task.name),
+        baseBranch,
+        branchName,
+        inputContext,
+      });
+    } catch (err) {
+      const reason = `Spawn failed: ${err instanceof Error ? err.message : String(err)}`;
+      log.error({ taskId: nextTask.taskId, err: reason }, 'agent spawn failed, blocking task');
+      await this.blockTask(nextTask.taskId, reason);
+      return { success: false, taskId: nextTask.taskId, reason };
+    }
 
     log.info({ taskId: nextTask.taskId, agentId: agent.id }, 'task dispatched');
 
diff --git a/apps/server/dispatch/phase-manager.ts b/apps/server/dispatch/phase-manager.ts
index 7702aff..6b9ec57 100644
--- a/apps/server/dispatch/phase-manager.ts
+++ b/apps/server/dispatch/phase-manager.ts
@@ -167,10 +167,7 @@ export class DefaultPhaseDispatchManager implements PhaseDispatchManager {
       };
     }
 
-    // Update phase status to 'in_progress'
-    await this.phaseRepository.update(nextPhase.phaseId, { status: 'in_progress' });
-
-    // Create phase branch in all linked project clones
+    // Create phase branch in all linked project clones (must succeed before marking in_progress)
     if (this.initiativeRepository && this.projectRepository && this.branchManager && this.workspaceRoot) {
       try {
         const initiative = await this.initiativeRepository.findById(phase.initiativeId);
@@ -204,10 +201,16 @@ export class DefaultPhaseDispatchManager implements PhaseDispatchManager {
           log.info({ phaseId: nextPhase.phaseId, phBranch, initBranch }, 'phase branch created');
         }
       } catch (err) {
-        log.error({ phaseId: nextPhase.phaseId, err: err instanceof Error ? err.message : String(err) }, 'failed to create phase branch');
+        const reason = `Branch creation failed: ${err instanceof Error ? err.message : String(err)}`;
+        log.error({ phaseId: nextPhase.phaseId, err: reason }, 'phase branch creation failed, blocking phase');
+        await this.blockPhase(nextPhase.phaseId, reason);
+        return { success: false, phaseId: nextPhase.phaseId, reason };
       }
     }
 
+    // Update phase status to 'in_progress' (only after branches confirmed)
+    await this.phaseRepository.update(nextPhase.phaseId, { status: 'in_progress' });
+
     // Remove from queue (now being worked on)
     this.phaseQueue.delete(nextPhase.phaseId);
 
diff --git a/apps/server/drizzle/0020_add_change_sets.sql b/apps/server/drizzle/0020_add_change_sets.sql
index 1567a69..9fcc300 100644
--- a/apps/server/drizzle/0020_add_change_sets.sql
+++ b/apps/server/drizzle/0020_add_change_sets.sql
@@ -9,7 +9,8 @@ CREATE TABLE `change_sets` (
   `status` text NOT NULL DEFAULT 'applied',
   `reverted_at` integer,
   `created_at` integer NOT NULL
-);--> statement-breakpoint
+);
+--> statement-breakpoint
 CREATE TABLE `change_set_entries` (
   `id` text PRIMARY KEY NOT NULL,
   `change_set_id` text NOT NULL REFERENCES `change_sets`(`id`) ON DELETE CASCADE,
@@ -20,6 +21,8 @@ CREATE TABLE `change_set_entries` (
   `new_state` text,
   `sort_order` integer NOT NULL DEFAULT 0,
   `created_at` integer NOT NULL
-);--> statement-breakpoint
-CREATE INDEX `change_sets_initiative_id_idx` ON `change_sets`(`initiative_id`);--> statement-breakpoint
+);
+--> statement-breakpoint
+CREATE INDEX `change_sets_initiative_id_idx` ON `change_sets`(`initiative_id`);
+--> statement-breakpoint
 CREATE INDEX `change_set_entries_change_set_id_idx` ON `change_set_entries`(`change_set_id`);
diff --git a/docs/dispatch-events.md b/docs/dispatch-events.md
index f897bb1..658fcdd 100644
--- a/docs/dispatch-events.md
+++ b/docs/dispatch-events.md
@@ -66,6 +66,7 @@ AccountCredentialsRefreshedEvent { accountId, expiresAt, previousExpiresAt? }
 7. **Summary propagation** — `completeTask()` reads the completing agent's `result.message` and stores it on the task's `summary` column. Dependent tasks see this summary in `context/tasks/<id>.md` frontmatter.
 8. **Approval check** — `completeTask()` checks `requiresApproval` (task-level, then initiative-level)
 9. **Approval flow** — If approval required: status → `pending_approval`, emit `task:pending_approval`
+10. **Spawn failure** — If `agentManager.spawn()` throws, the task is blocked via `blockTask()` with the error message. The dispatch cycle continues instead of crashing.
 
 ### DispatchManager Methods
 
@@ -85,8 +86,9 @@ AccountCredentialsRefreshedEvent { accountId, expiresAt, previousExpiresAt? }
 
 1. **Queue** — `queuePhase(phaseId)` validates phase is approved, gets dependencies
 2. **Dispatch** — `dispatchNextPhase()` finds phase with all deps complete
-3. **Auto-queue tasks** — When phase starts, pending execution tasks are queued (planning-category tasks excluded)
-4. **Events** — `phase:queued`, `phase:started`, `phase:completed`, `phase:blocked`
+3. **Branch creation** — Initiative and phase branches are created in all linked project clones. On failure, the phase is blocked via `blockPhase()` and tasks are NOT queued.
+4. **Auto-queue tasks** — When phase starts (branches confirmed), pending execution tasks are queued (planning-category tasks excluded)
+5. **Events** — `phase:queued`, `phase:started`, `phase:completed`, `phase:blocked`
 
 ### PhaseDispatchManager Methods