diff --git a/src/features/background-agent/compaction-aware-message-resolver.test.ts b/src/features/background-agent/compaction-aware-message-resolver.test.ts
new file mode 100644
index 00000000..b8a659b0
--- /dev/null
+++ b/src/features/background-agent/compaction-aware-message-resolver.test.ts
@@ -0,0 +1,190 @@
+import { describe, test, expect, beforeEach, afterEach } from "bun:test"
+import { mkdtempSync, writeFileSync, rmSync } from "node:fs"
+import { join } from "node:path"
+import { tmpdir } from "node:os"
+import { isCompactionAgent, findNearestMessageExcludingCompaction } from "./compaction-aware-message-resolver"
+
+describe("isCompactionAgent", () => {
+  describe("#given agent name variations", () => {
+    test("returns true for 'compaction'", () => {
+      // when
+      const result = isCompactionAgent("compaction")
+
+      // then
+      expect(result).toBe(true)
+    })
+
+    test("returns true for 'Compaction' (case insensitive)", () => {
+      // when
+      const result = isCompactionAgent("Compaction")
+
+      // then
+      expect(result).toBe(true)
+    })
+
+    test("returns true for ' compaction ' (with whitespace)", () => {
+      // when
+      const result = isCompactionAgent(" compaction ")
+
+      // then
+      expect(result).toBe(true)
+    })
+
+    test("returns false for undefined", () => {
+      // when
+      const result = isCompactionAgent(undefined)
+
+      // then
+      expect(result).toBe(false)
+    })
+
+    test("returns false for null", () => {
+      // when
+      const result = isCompactionAgent(null as unknown as string)
+
+      // then
+      expect(result).toBe(false)
+    })
+
+    test("returns false for non-compaction agent like 'sisyphus'", () => {
+      // when
+      const result = isCompactionAgent("sisyphus")
+
+      // then
+      expect(result).toBe(false)
+    })
+  })
+})
+
+describe("findNearestMessageExcludingCompaction", () => {
+  let tempDir: string
+
+  beforeEach(() => {
+    tempDir = mkdtempSync(join(tmpdir(), "compaction-test-"))
+  })
+
+  afterEach(() => {
+    rmSync(tempDir, { force: true, recursive: true })
+  })
+
+  describe("#given directory with messages", () => {
+    test("finds message with full agent and model", () => {
+      // given
+      const message = {
+        agent: "sisyphus",
+        model: { providerID: "anthropic", modelID: "claude-opus-4-6" },
+      }
+      writeFileSync(join(tempDir, "001.json"), JSON.stringify(message))
+
+      // when
+      const result = findNearestMessageExcludingCompaction(tempDir)
+
+      // then
+      expect(result).not.toBeNull()
+      expect(result?.agent).toBe("sisyphus")
+      expect(result?.model?.providerID).toBe("anthropic")
+      expect(result?.model?.modelID).toBe("claude-opus-4-6")
+    })
+
+    test("skips compaction agent messages", () => {
+      // given
+      const compactionMessage = {
+        agent: "compaction",
+        model: { providerID: "anthropic", modelID: "claude-opus-4-6" },
+      }
+      const validMessage = {
+        agent: "sisyphus",
+        model: { providerID: "anthropic", modelID: "claude-opus-4-6" },
+      }
+      writeFileSync(join(tempDir, "001.json"), JSON.stringify(compactionMessage))
+      writeFileSync(join(tempDir, "002.json"), JSON.stringify(validMessage))
+
+      // when
+      const result = findNearestMessageExcludingCompaction(tempDir)
+
+      // then
+      expect(result).not.toBeNull()
+      expect(result?.agent).toBe("sisyphus")
+    })
+
+    test("falls back to partial agent/model match", () => {
+      // given
+      const messageWithAgentOnly = {
+        agent: "hephaestus",
+      }
+      const messageWithModelOnly = {
+        model: { providerID: "openai", modelID: "gpt-5.3" },
+      }
+      writeFileSync(join(tempDir, "001.json"), JSON.stringify(messageWithModelOnly))
+      writeFileSync(join(tempDir, "002.json"), JSON.stringify(messageWithAgentOnly))
+
+      // when
+      const result = findNearestMessageExcludingCompaction(tempDir)
+
+      // then
+      expect(result).not.toBeNull()
+      // Should find the one with agent first (sorted reverse, so 002 is checked first)
+      expect(result?.agent).toBe("hephaestus")
+    })
+
+    test("returns null for empty directory", () => {
+      // given - empty directory (tempDir is already empty)
+
+      // when
+      const result = findNearestMessageExcludingCompaction(tempDir)
+
+      // then
+      expect(result).toBeNull()
+    })
+
+    test("returns null for non-existent directory", () => {
+      // given
+      const nonExistentDir = join(tmpdir(), "non-existent-dir-12345")
+
+      // when
+      const result = findNearestMessageExcludingCompaction(nonExistentDir)
+
+      // then
+      expect(result).toBeNull()
+    })
+
+    test("skips invalid JSON files and finds valid message", () => {
+      // given
+      const invalidJson = "{ invalid json"
+      const validMessage = {
+        agent: "oracle",
+        model: { providerID: "google", modelID: "gemini-2-flash" },
+      }
+      writeFileSync(join(tempDir, "001.json"), invalidJson)
+      writeFileSync(join(tempDir, "002.json"), JSON.stringify(validMessage))
+
+      // when
+      const result = findNearestMessageExcludingCompaction(tempDir)
+
+      // then
+      expect(result).not.toBeNull()
+      expect(result?.agent).toBe("oracle")
+    })
+
+    test("finds newest valid message (sorted by filename reverse)", () => {
+      // given
+      const olderMessage = {
+        agent: "older",
+        model: { providerID: "a", modelID: "b" },
+      }
+      const newerMessage = {
+        agent: "newer",
+        model: { providerID: "c", modelID: "d" },
+      }
+      writeFileSync(join(tempDir, "001.json"), JSON.stringify(olderMessage))
+      writeFileSync(join(tempDir, "010.json"), JSON.stringify(newerMessage))
+
+      // when
+      const result = findNearestMessageExcludingCompaction(tempDir)
+
+      // then
+      expect(result).not.toBeNull()
+      expect(result?.agent).toBe("newer")
+    })
+  })
+})
diff --git a/src/features/background-agent/compaction-aware-message-resolver.ts b/src/features/background-agent/compaction-aware-message-resolver.ts
new file mode 100644
index 00000000..1bf94bfd
--- /dev/null
+++ b/src/features/background-agent/compaction-aware-message-resolver.ts
@@ -0,0 +1,57 @@
+import { readdirSync, readFileSync } from "node:fs"
+import { join } from "node:path"
+import type { StoredMessage } from "../hook-message-injector"
+
+export function isCompactionAgent(agent: string | undefined): boolean {
+  return agent?.trim().toLowerCase() === "compaction"
+}
+
+function hasFullAgentAndModel(message: StoredMessage): boolean {
+  return !!message.agent &&
+    !isCompactionAgent(message.agent) &&
+    !!message.model?.providerID &&
+    !!message.model?.modelID
+}
+
+function hasPartialAgentOrModel(message: StoredMessage): boolean {
+  const hasAgent = !!message.agent && !isCompactionAgent(message.agent)
+  const hasModel = !!message.model?.providerID && !!message.model?.modelID
+  return hasAgent || hasModel
+}
+
+export function findNearestMessageExcludingCompaction(messageDir: string): StoredMessage | null {
+  try {
+    const files = readdirSync(messageDir)
+      .filter((name) => name.endsWith(".json"))
+      .sort()
+      .reverse()
+
+    for (const file of files) {
+      try {
+        const content = readFileSync(join(messageDir, file), "utf-8")
+        const parsed = JSON.parse(content) as StoredMessage
+        if (hasFullAgentAndModel(parsed)) {
+          return parsed
+        }
+      } catch {
+        continue
+      }
+    }
+
+    for (const file of files) {
+      try {
+        const content = readFileSync(join(messageDir, file), "utf-8")
+        const parsed = JSON.parse(content) as StoredMessage
+        if (hasPartialAgentOrModel(parsed)) {
+          return parsed
+        }
+      } catch {
+        continue
+      }
+    }
+  } catch {
+    return null
+  }
+
+  return null
+}
diff --git a/src/features/background-agent/error-classifier.test.ts b/src/features/background-agent/error-classifier.test.ts
new file mode 100644
index 00000000..1fe24e93
--- /dev/null
+++ b/src/features/background-agent/error-classifier.test.ts
@@ -0,0 +1,351 @@
+import { describe, test, expect } from "bun:test"
+import {
+  isRecord,
+  isAbortedSessionError,
+  getErrorText,
+  extractErrorName,
+  extractErrorMessage,
+  getSessionErrorMessage,
+} from "./error-classifier"
+
+describe("isRecord", () => {
+  describe("#given null or primitive values", () => {
+    test("returns false for null", () => {
+      expect(isRecord(null)).toBe(false)
+    })
+
+    test("returns false for undefined", () => {
+      expect(isRecord(undefined)).toBe(false)
+    })
+
+    test("returns false for string", () => {
+      expect(isRecord("hello")).toBe(false)
+    })
+
+    test("returns false for number", () => {
+      expect(isRecord(42)).toBe(false)
+    })
+
+    test("returns false for boolean", () => {
+      expect(isRecord(true)).toBe(false)
+    })
+
+    test("returns true for array (arrays are objects)", () => {
+      expect(isRecord([1, 2, 3])).toBe(true)
+    })
+  })
+
+  describe("#given plain objects", () => {
+    test("returns true for empty object", () => {
+      expect(isRecord({})).toBe(true)
+    })
+
+    test("returns true for object with properties", () => {
+      expect(isRecord({ key: "value" })).toBe(true)
+    })
+
+    test("returns true for object with nested objects", () => {
+      expect(isRecord({ nested: { deep: true } })).toBe(true)
+    })
+  })
+
+  describe("#given Error instances", () => {
+    test("returns true for Error instance", () => {
+      expect(isRecord(new Error("test"))).toBe(true)
+    })
+
+    test("returns true for TypeError instance", () => {
+      expect(isRecord(new TypeError("test"))).toBe(true)
+    })
+  })
+})
+
+describe("isAbortedSessionError", () => {
+  describe("#given error with aborted message", () => {
+    test("returns true for string containing aborted", () => {
+      expect(isAbortedSessionError("Session aborted")).toBe(true)
+    })
+
+    test("returns true for string with ABORTED uppercase", () => {
+      expect(isAbortedSessionError("Session ABORTED")).toBe(true)
+    })
+
+    test("returns true for Error with aborted in message", () => {
+      expect(isAbortedSessionError(new Error("Session aborted"))).toBe(true)
+    })
+
+    test("returns true for object with message containing aborted", () => {
+      expect(isAbortedSessionError({ message: "The session was aborted" })).toBe(true)
+    })
+  })
+
+  describe("#given error without aborted message", () => {
+    test("returns false for string without aborted", () => {
+      expect(isAbortedSessionError("Session completed")).toBe(false)
+    })
+
+    test("returns false for Error without aborted", () => {
+      expect(isAbortedSessionError(new Error("Something went wrong"))).toBe(false)
+    })
+
+    test("returns false for empty string", () => {
+      expect(isAbortedSessionError("")).toBe(false)
+    })
+  })
+
+  describe("#given invalid inputs", () => {
+    test("returns false for null", () => {
+      expect(isAbortedSessionError(null)).toBe(false)
+    })
+
+    test("returns false for undefined", () => {
+      expect(isAbortedSessionError(undefined)).toBe(false)
+    })
+
+    test("returns false for object without message", () => {
+      expect(isAbortedSessionError({ code: "ABORTED" })).toBe(false)
+    })
+  })
+})
+
+describe("getErrorText", () => {
+  describe("#given string input", () => {
+    test("returns the string as-is", () => {
+      expect(getErrorText("Something went wrong")).toBe("Something went wrong")
+    })
+
+    test("returns empty string for empty string", () => {
+      expect(getErrorText("")).toBe("")
+    })
+  })
+
+  describe("#given Error instance", () => {
+    test("returns name and message format", () => {
+      expect(getErrorText(new Error("test message"))).toBe("Error: test message")
+    })
+
+    test("returns TypeError format", () => {
+      expect(getErrorText(new TypeError("type error"))).toBe("TypeError: type error")
+    })
+  })
+
+  describe("#given object with message property", () => {
+    test("returns message property as string", () => {
+      expect(getErrorText({ message: "custom error" })).toBe("custom error")
+    })
+
+    test("returns name property when message not available", () => {
+      expect(getErrorText({ name: "CustomError" })).toBe("CustomError")
+    })
+
+    test("prefers message over name", () => {
+      expect(getErrorText({ name: "CustomError", message: "error message" })).toBe("error message")
+    })
+  })
+
+  describe("#given invalid inputs", () => {
+    test("returns empty string for null", () => {
+      expect(getErrorText(null)).toBe("")
+    })
+
+    test("returns empty string for undefined", () => {
+      expect(getErrorText(undefined)).toBe("")
+    })
+
+    test("returns empty string for object without message or name", () => {
+      expect(getErrorText({ code: 500 })).toBe("")
+    })
+  })
+})
+
+describe("extractErrorName", () => {
+  describe("#given Error instance", () => {
+    test("returns Error for generic Error", () => {
+      expect(extractErrorName(new Error("test"))).toBe("Error")
+    })
+
+    test("returns TypeError name", () => {
+      expect(extractErrorName(new TypeError("test"))).toBe("TypeError")
+    })
+
+    test("returns RangeError name", () => {
+      expect(extractErrorName(new RangeError("test"))).toBe("RangeError")
+    })
+  })
+
+  describe("#given plain object with name property", () => {
+    test("returns name property when string", () => {
+      expect(extractErrorName({ name: "CustomError" })).toBe("CustomError")
+    })
+
+    test("returns undefined when name is not string", () => {
+      expect(extractErrorName({ name: 123 })).toBe(undefined)
+    })
+  })
+
+  describe("#given invalid inputs", () => {
+    test("returns undefined for null", () => {
+      expect(extractErrorName(null)).toBe(undefined)
+    })
+
+    test("returns undefined for undefined", () => {
+      expect(extractErrorName(undefined)).toBe(undefined)
+    })
+
+    test("returns undefined for string", () => {
+      expect(extractErrorName("Error message")).toBe(undefined)
+    })
+
+    test("returns undefined for object without name property", () => {
+      expect(extractErrorName({ message: "test" })).toBe(undefined)
+    })
+  })
+})
+
+describe("extractErrorMessage", () => {
+  describe("#given string input", () => {
+    test("returns the string as-is", () => {
+      expect(extractErrorMessage("error message")).toBe("error message")
+    })
+
+    test("returns undefined for empty string", () => {
+      expect(extractErrorMessage("")).toBe(undefined)
+    })
+  })
+
+  describe("#given Error instance", () => {
+    test("returns error message", () => {
+      expect(extractErrorMessage(new Error("test error"))).toBe("test error")
+    })
+
+    test("returns empty string for Error with no message", () => {
+      expect(extractErrorMessage(new Error())).toBe("")
+    })
+  })
+
+  describe("#given object with message property", () => {
+    test("returns message property", () => {
+      expect(extractErrorMessage({ message: "custom message" })).toBe("custom message")
+    })
+
+    test("falls through to JSON.stringify for empty message value", () => {
+      expect(extractErrorMessage({ message: "" })).toBe('{"message":""}')
+    })
+  })
+
+  describe("#given nested error structure", () => {
+    test("extracts message from nested error object", () => {
+      expect(extractErrorMessage({ error: { message: "nested error" } })).toBe("nested error")
+    })
+
+    test("extracts message from data.error structure", () => {
+      expect(extractErrorMessage({ data: { error: "data error" } })).toBe("data error")
+    })
+
+    test("extracts message from cause property", () => {
+      expect(extractErrorMessage({ cause: "cause error" })).toBe("cause error")
+    })
+
+    test("extracts message from cause object with message", () => {
+      expect(extractErrorMessage({ cause: { message: "cause message" } })).toBe("cause message")
+    })
+  })
+
+  describe("#given complex error with data wrapper", () => {
+    test("extracts from error.data.message", () => {
+      const error = {
+        data: {
+          message: "data message",
+        },
+      }
+      expect(extractErrorMessage(error)).toBe("data message")
+    })
+
+    test("prefers top over nested-level message", () => {
+      const error = {
+        message: "top level",
+        data: { message: "nested" },
+      }
+      expect(extractErrorMessage(error)).toBe("top level")
+    })
+  })
+
+  describe("#given invalid inputs", () => {
+    test("returns undefined for null", () => {
+      expect(extractErrorMessage(null)).toBe(undefined)
+    })
+
+    test("returns undefined for undefined", () => {
+      expect(extractErrorMessage(undefined)).toBe(undefined)
+    })
+  })
+
+  describe("#given object without extractable message", () => {
+    test("falls back to JSON.stringify for object", () => {
+      const obj = { code: 500, details: "error" }
+      const result = extractErrorMessage(obj)
+      expect(result).toContain('"code":500')
+    })
+
+    test("falls back to String() for non-serializable object", () => {
+      const circular: Record<string, unknown> = { a: 1 }
+      circular.self = circular
+      const result = extractErrorMessage(circular)
+      expect(result).toBe("[object Object]")
+    })
+  })
+})
+
+describe("getSessionErrorMessage", () => {
+  describe("#given valid error properties", () => {
+    test("extracts message from error.message", () => {
+      const properties = { error: { message: "session error" } }
+      expect(getSessionErrorMessage(properties)).toBe("session error")
+    })
+
+    test("extracts message from error.data.message", () => {
+      const properties = {
+        error: {
+          data: { message: "data error message" },
+        },
+      }
+      expect(getSessionErrorMessage(properties)).toBe("data error message")
+    })
+
+    test("prefers error.data.message over error.message", () => {
+      const properties = {
+        error: {
+          message: "top level",
+          data: { message: "nested" },
+        },
+      }
+      expect(getSessionErrorMessage(properties)).toBe("nested")
+    })
+  })
+
+  describe("#given missing or invalid properties", () => {
+    test("returns undefined when error is missing", () => {
+      expect(getSessionErrorMessage({})).toBe(undefined)
+    })
+
+    test("returns undefined when error is null", () => {
+      expect(getSessionErrorMessage({ error: null })).toBe(undefined)
+    })
+
+    test("returns undefined when error is string", () => {
+      expect(getSessionErrorMessage({ error: "error string" })).toBe(undefined)
+    })
+
+    test("returns undefined when data is not an object", () => {
+      expect(getSessionErrorMessage({ error: { data: "not an object" } })).toBe(undefined)
+    })
+
+    test("returns undefined when message is not string", () => {
+      expect(getSessionErrorMessage({ error: { message: 123 } })).toBe(undefined)
+    })
+
+    test("returns undefined when data.message is not string", () => {
+      expect(getSessionErrorMessage({ error: { data: { message: null } } })).toBe(undefined)
+    })
+  })
+})
diff --git a/src/features/background-agent/error-classifier.ts b/src/features/background-agent/error-classifier.ts
index 8be1dd3d..5c7e90b4 100644
--- a/src/features/background-agent/error-classifier.ts
+++ b/src/features/background-agent/error-classifier.ts
@@ -1,3 +1,7 @@
+export function isRecord(value: unknown): value is Record<string, unknown> {
+  return typeof value === "object" && value !== null
+}
+
 export function isAbortedSessionError(error: unknown): boolean {
   const message = getErrorText(error)
   return message.toLowerCase().includes("aborted")
@@ -19,3 +23,61 @@ export function getErrorText(error: unknown): string {
   }
   return ""
 }
+
+export function extractErrorName(error: unknown): string | undefined {
+  if (isRecord(error) && typeof error["name"] === "string") return error["name"]
+  if (error instanceof Error) return error.name
+  return undefined
+}
+
+export function extractErrorMessage(error: unknown): string | undefined {
+  if (!error) return undefined
+  if (typeof error === "string") return error
+  if (error instanceof Error) return error.message
+
+  if (isRecord(error)) {
+    const dataRaw = error["data"]
+    const candidates: unknown[] = [
+      error,
+      dataRaw,
+      error["error"],
+      isRecord(dataRaw) ? (dataRaw as Record<string, unknown>)["error"] : undefined,
+      error["cause"],
+    ]
+
+    for (const candidate of candidates) {
+      if (typeof candidate === "string" && candidate.length > 0) return candidate
+      if (
+        isRecord(candidate) &&
+        typeof candidate["message"] === "string" &&
+        candidate["message"].length > 0
+      ) {
+        return candidate["message"]
+      }
+    }
+  }
+
+  try {
+    return JSON.stringify(error)
+  } catch {
+    return String(error)
+  }
+}
+
+interface EventPropertiesLike {
+  [key: string]: unknown
+}
+
+export function getSessionErrorMessage(properties: EventPropertiesLike): string | undefined {
+  const errorRaw = properties["error"]
+  if (!isRecord(errorRaw)) return undefined
+
+  const dataRaw = errorRaw["data"]
+  if (isRecord(dataRaw)) {
+    const message = dataRaw["message"]
+    if (typeof message === "string") return message
+  }
+
+  const message = errorRaw["message"]
+  return typeof message === "string" ? message : undefined
+}
diff --git a/src/features/background-agent/fallback-retry-handler.test.ts b/src/features/background-agent/fallback-retry-handler.test.ts
new file mode 100644
index 00000000..1a99503f
--- /dev/null
+++ b/src/features/background-agent/fallback-retry-handler.test.ts
@@ -0,0 +1,270 @@
+import { describe, test, expect, mock, beforeEach } from "bun:test"
+
+mock.module("../../shared", () => ({
+  log: mock(() => {}),
+  readConnectedProvidersCache: mock(() => null),
+  readProviderModelsCache: mock(() => null),
+}))
+
+mock.module("../../shared/model-error-classifier", () => ({
+  shouldRetryError: mock(() => true),
+  getNextFallback: mock((chain: Array<{ model: string }>, attempt: number) => chain[attempt]),
+  hasMoreFallbacks: mock((chain: Array<{ model: string }>, attempt: number) => attempt < chain.length),
+  selectFallbackProvider: mock((providers: string[]) => providers[0]),
+}))
+
+mock.module("../../shared/provider-model-id-transform", () => ({
+  transformModelForProvider: mock((_provider: string, model: string) => model),
+}))
+
+import { tryFallbackRetry } from "./fallback-retry-handler"
+import { shouldRetryError } from "../../shared/model-error-classifier"
+import type { BackgroundTask } from "./types"
+import type { ConcurrencyManager } from "./concurrency"
+
+function createMockTask(overrides: Partial<BackgroundTask> = {}): BackgroundTask {
+  return {
+    id: "test-task-1",
+    description: "test task",
+    prompt: "test prompt",
+    agent: "sisyphus-junior",
+    status: "error",
+    parentSessionID: "parent-session-1",
+    parentMessageID: "parent-message-1",
+    fallbackChain: [
+      { model: "fallback-model-1", providers: ["provider-a"], variant: undefined },
+      { model: "fallback-model-2", providers: ["provider-b"], variant: undefined },
+    ],
+    attemptCount: 0,
+    concurrencyKey: "provider-a/original-model",
+    model: { providerID: "provider-a", modelID: "original-model" },
+    ...overrides,
+  }
+}
+
+function createMockConcurrencyManager(): ConcurrencyManager {
+  return {
+    release: mock(() => {}),
+    acquire: mock(async () => {}),
+    getQueueLength: mock(() => 0),
+    getActiveCount: mock(() => 0),
+  } as unknown as ConcurrencyManager
+}
+
+function createMockClient() {
+  return {
+    session: {
+      abort: mock(async () => ({})),
+    },
+  } as any
+}
+
+function createDefaultArgs(taskOverrides: Partial<BackgroundTask> = {}) {
+  const processKeyFn = mock(() => {})
+  const queuesByKey = new Map<string, Array<{ task: BackgroundTask; input: any }>>()
+  const idleDeferralTimers = new Map<string, ReturnType<typeof setTimeout>>()
+  const concurrencyManager = createMockConcurrencyManager()
+  const client = createMockClient()
+  const task = createMockTask(taskOverrides)
+
+  return {
+    task,
+    errorInfo: { name: "OverloadedError", message: "model overloaded" },
+    source: "polling",
+    concurrencyManager,
+    client,
+    idleDeferralTimers,
+    queuesByKey,
+    processKey: processKeyFn,
+  }
+}
+
+describe("tryFallbackRetry", () => {
+  beforeEach(() => {
+    ;(shouldRetryError as any).mockImplementation(() => true)
+  })
+
+  describe("#given retryable error with fallback chain", () => {
+    test("returns true and enqueues retry", () => {
+      const args = createDefaultArgs()
+
+      const result = tryFallbackRetry(args)
+
+      expect(result).toBe(true)
+    })
+
+    test("resets task status to pending", () => {
+      const args = createDefaultArgs()
+
+      tryFallbackRetry(args)
+
+      expect(args.task.status).toBe("pending")
+    })
+
+    test("increments attemptCount", () => {
+      const args = createDefaultArgs()
+
+      tryFallbackRetry(args)
+
+      expect(args.task.attemptCount).toBe(1)
+    })
+
+    test("updates task model to fallback", () => {
+      const args = createDefaultArgs()
+
+      tryFallbackRetry(args)
+
+      expect(args.task.model?.modelID).toBe("fallback-model-1")
+      expect(args.task.model?.providerID).toBe("provider-a")
+    })
+
+    test("clears sessionID and startedAt", () => {
+      const args = createDefaultArgs({
+        sessionID: "old-session",
+        startedAt: new Date(),
+      })
+
+      tryFallbackRetry(args)
+
+      expect(args.task.sessionID).toBeUndefined()
+      expect(args.task.startedAt).toBeUndefined()
+    })
+
+    test("clears error field", () => {
+      const args = createDefaultArgs({ error: "previous error" })
+
+      tryFallbackRetry(args)
+
+      expect(args.task.error).toBeUndefined()
+    })
+
+    test("sets new queuedAt", () => {
+      const args = createDefaultArgs()
+
+      tryFallbackRetry(args)
+
+      expect(args.task.queuedAt).toBeInstanceOf(Date)
+    })
+
+    test("releases concurrency slot", () => {
+      const args = createDefaultArgs()
+
+      tryFallbackRetry(args)
+
+      expect(args.concurrencyManager.release).toHaveBeenCalledWith("provider-a/original-model")
+    })
+
+    test("clears concurrencyKey after release", () => {
+      const args = createDefaultArgs()
+
+      tryFallbackRetry(args)
+
+      expect(args.task.concurrencyKey).toBeUndefined()
+    })
+
+    test("aborts existing session", () => {
+      const args = createDefaultArgs({ sessionID: "session-to-abort" })
+
+      tryFallbackRetry(args)
+
+      expect(args.client.session.abort).toHaveBeenCalledWith({
+        path: { id: "session-to-abort" },
+      })
+    })
+
+    test("adds retry input to queue and calls processKey", () => {
+      const args = createDefaultArgs()
+
+      tryFallbackRetry(args)
+
+      const key = `${args.task.model!.providerID}/${args.task.model!.modelID}`
+      const queue = args.queuesByKey.get(key)
+      expect(queue).toBeDefined()
+      expect(queue!.length).toBe(1)
+      expect(queue![0].task).toBe(args.task)
+      expect(args.processKey).toHaveBeenCalledWith(key)
+    })
+  })
+
+  describe("#given non-retryable error", () => {
+    test("returns false when shouldRetryError returns false", () => {
+      ;(shouldRetryError as any).mockImplementation(() => false)
+      const args = createDefaultArgs()
+
+      const result = tryFallbackRetry(args)
+
+      expect(result).toBe(false)
+    })
+  })
+
+  describe("#given no fallback chain", () => {
+    test("returns false when fallbackChain is undefined", () => {
+      const args = createDefaultArgs({ fallbackChain: undefined })
+
+      const result = tryFallbackRetry(args)
+
+      expect(result).toBe(false)
+    })
+
+    test("returns false when fallbackChain is empty", () => {
+      const args = createDefaultArgs({ fallbackChain: [] })
+
+      const result = tryFallbackRetry(args)
+
+      expect(result).toBe(false)
+    })
+  })
+
+  describe("#given exhausted fallbacks", () => {
+    test("returns false when attemptCount exceeds chain length", () => {
+      const args = createDefaultArgs({ attemptCount: 5 })
+
+      const result = tryFallbackRetry(args)
+
+      expect(result).toBe(false)
+    })
+  })
+
+  describe("#given task without concurrency key", () => {
+    test("skips concurrency release", () => {
+      const args = createDefaultArgs({ concurrencyKey: undefined })
+
+      tryFallbackRetry(args)
+
+      expect(args.concurrencyManager.release).not.toHaveBeenCalled()
+    })
+  })
+
+  describe("#given task without session", () => {
+    test("skips session abort", () => {
+      const args = createDefaultArgs({ sessionID: undefined })
+
+      tryFallbackRetry(args)
+
+      expect(args.client.session.abort).not.toHaveBeenCalled()
+    })
+  })
+
+  describe("#given active idle deferral timer", () => {
+    test("clears the timer and removes from map", () => {
+      const args = createDefaultArgs()
+      const timerId = setTimeout(() => {}, 10000)
+      args.idleDeferralTimers.set("test-task-1", timerId)
+
+      tryFallbackRetry(args)
+
+      expect(args.idleDeferralTimers.has("test-task-1")).toBe(false)
+    })
+  })
+
+  describe("#given second attempt", () => {
+    test("uses second fallback in chain", () => {
+      const args = createDefaultArgs({ attemptCount: 1 })
+
+      tryFallbackRetry(args)
+
+      expect(args.task.model?.modelID).toBe("fallback-model-2")
+      expect(args.task.attemptCount).toBe(2)
+    })
+  })
+})
diff --git a/src/features/background-agent/fallback-retry-handler.ts b/src/features/background-agent/fallback-retry-handler.ts
new file mode 100644
index 00000000..f21b9228
--- /dev/null
+++ b/src/features/background-agent/fallback-retry-handler.ts
@@ -0,0 +1,125 @@
+import type { BackgroundTask, LaunchInput } from "./types"
+import type { FallbackEntry } from "../../shared/model-requirements"
+import type { ConcurrencyManager } from "./concurrency"
+import type { OpencodeClient, QueueItem } from "./constants"
+import { log, readConnectedProvidersCache, readProviderModelsCache } from "../../shared"
+import {
+  shouldRetryError,
+  getNextFallback,
+  hasMoreFallbacks,
+  selectFallbackProvider,
+} from "../../shared/model-error-classifier"
+import { transformModelForProvider } from "../../shared/provider-model-id-transform"
+
+export function tryFallbackRetry(args: {
+  task: BackgroundTask
+  errorInfo: { name?: string; message?: string }
+  source: string
+  concurrencyManager: ConcurrencyManager
+  client: OpencodeClient
+  idleDeferralTimers: Map<string, ReturnType<typeof setTimeout>>
+  queuesByKey: Map<string, QueueItem[]>
+  processKey: (key: string) => void
+}): boolean {
+  const { task, errorInfo, source, concurrencyManager, client, idleDeferralTimers, queuesByKey, processKey } = args
+  const fallbackChain = task.fallbackChain
+  const canRetry =
+    shouldRetryError(errorInfo) &&
+    fallbackChain &&
+    fallbackChain.length > 0 &&
+    hasMoreFallbacks(fallbackChain, task.attemptCount ?? 0)
+
+  if (!canRetry) return false
+
+  const attemptCount = task.attemptCount ?? 0
+  const providerModelsCache = readProviderModelsCache()
+  const connectedProviders = providerModelsCache?.connected ?? readConnectedProvidersCache()
+  const connectedSet = connectedProviders ? new Set(connectedProviders.map(p => p.toLowerCase())) : null
+
+  const isReachable = (entry: FallbackEntry): boolean => {
+    if (!connectedSet) return true
+    return entry.providers.some((p) => connectedSet.has(p.toLowerCase()))
+  }
+
+  let selectedAttemptCount = attemptCount
+  let nextFallback: FallbackEntry | undefined
+  while (fallbackChain && selectedAttemptCount < fallbackChain.length) {
+    const candidate = getNextFallback(fallbackChain, selectedAttemptCount)
+    if (!candidate) break
+    selectedAttemptCount++
+    if (!isReachable(candidate)) {
+      log("[background-agent] Skipping unreachable fallback:", {
+        taskId: task.id,
+        source,
+        model: candidate.model,
+        providers: candidate.providers,
+      })
+      continue
+    }
+    nextFallback = candidate
+    break
+  }
+  if (!nextFallback) return false
+
+  const providerID = selectFallbackProvider(
+    nextFallback.providers,
+    task.model?.providerID,
+  )
+
+  log("[background-agent] Retryable error, attempting fallback:", {
+    taskId: task.id,
+    source,
+    errorName: errorInfo.name,
+    errorMessage: errorInfo.message?.slice(0, 100),
+    attemptCount: selectedAttemptCount,
+    nextModel: `${providerID}/${nextFallback.model}`,
+  })
+
+  if (task.concurrencyKey) {
+    concurrencyManager.release(task.concurrencyKey)
+    task.concurrencyKey = undefined
+  }
+
+  if (task.sessionID) {
+    client.session.abort({ path: { id: task.sessionID } }).catch(() => {})
+  }
+
+  const idleTimer = idleDeferralTimers.get(task.id)
+  if (idleTimer) {
+    clearTimeout(idleTimer)
+    idleDeferralTimers.delete(task.id)
+  }
+
+  task.attemptCount = selectedAttemptCount
+  const transformedModelId = transformModelForProvider(providerID, nextFallback.model)
+  task.model = {
+    providerID,
+    modelID: transformedModelId,
+    variant: nextFallback.variant,
+  }
+  task.status = "pending"
+  task.sessionID = undefined
+  task.startedAt = undefined
+  task.queuedAt = new Date()
+  task.error = undefined
+
+  const key = task.model ? `${task.model.providerID}/${task.model.modelID}` : task.agent
+  const queue = queuesByKey.get(key) ?? []
+  const retryInput: LaunchInput = {
+    description: task.description,
+    prompt: task.prompt,
+    agent: task.agent,
+    parentSessionID: task.parentSessionID,
+    parentMessageID: task.parentMessageID,
+    parentModel: task.parentModel,
+    parentAgent: task.parentAgent,
+    parentTools: task.parentTools,
+    model: task.model,
+    fallbackChain: task.fallbackChain,
+    category: task.category,
+  }
+  queue.push({ task, input: retryInput })
+  queuesByKey.set(key, queue)
+  processKey(key)
+  return true
+}
diff --git a/src/features/background-agent/manager.ts b/src/features/background-agent/manager.ts
index ee49b20b..a77e063a 100644
--- a/src/features/background-agent/manager.ts
+++ b/src/features/background-agent/manager.ts
@@ -5,16 +5,14 @@ import type {
   LaunchInput,
   ResumeInput,
 } from "./types"
-import type { FallbackEntry } from "../../shared/model-requirements"
 import { TaskHistory } from "./task-history"
 import {
   log,
   getAgentToolRestrictions,
+  getMessageDir,
   normalizePromptTools,
   normalizeSDKResponse,
   promptWithModelSuggestionRetry,
-  readConnectedProvidersCache,
-  readProviderModelsCache,
   resolveInheritedPromptTools,
   createInternalAgentTextPart,
 } from "../../shared"
@@ -25,28 +23,29 @@ import type { BackgroundTaskConfig, TmuxConfig } from "../../config/schema"
 import { isInsideTmux } from "../../shared/tmux"
 import {
   shouldRetryError,
-  getNextFallback,
   hasMoreFallbacks,
-  selectFallbackProvider,
 } from "../../shared/model-error-classifier"
-import { transformModelForProvider } from "../../shared/provider-model-id-transform"
 import {
-  DEFAULT_MESSAGE_STALENESS_TIMEOUT_MS,
-  DEFAULT_STALE_TIMEOUT_MS,
   MIN_IDLE_TIME_MS,
-  MIN_RUNTIME_BEFORE_STALE_MS,
   POLLING_INTERVAL_MS,
   TASK_CLEANUP_DELAY_MS,
-  TASK_TTL_MS,
 } from "./constants"
 
 import { subagentSessions } from "../claude-code-session-state"
 import { getTaskToastManager } from "../task-toast-manager"
-import { MESSAGE_STORAGE, type StoredMessage } from "../hook-message-injector"
-import { existsSync, readFileSync, readdirSync } from "node:fs"
-import { join } from "node:path"
-
-type ProcessCleanupEvent = NodeJS.Signals | "beforeExit" | "exit"
+import { formatDuration } from "./duration-formatter"
+import {
+  isAbortedSessionError,
+  extractErrorName,
+  extractErrorMessage,
+  getSessionErrorMessage,
+  isRecord,
+} from "./error-classifier"
+import { tryFallbackRetry } from "./fallback-retry-handler"
+import { registerManagerForCleanup, unregisterManagerForCleanup } from "./process-cleanup"
+import { isCompactionAgent, findNearestMessageExcludingCompaction } from "./compaction-aware-message-resolver"
+import { pruneStaleTasksAndNotifications } from "./task-poller"
+import { checkAndInterruptStaleTasks } from "./task-poller"
 
 type OpencodeClient = PluginInput["client"]
 
@@ -89,9 +88,7 @@ export interface SubagentSessionCreatedEvent {
 export type OnSubagentSessionCreated = (event: SubagentSessionCreatedEvent) => Promise<void>
 
 export class BackgroundManager {
-  private static cleanupManagers = new Set<BackgroundManager>()
-  private static cleanupRegistered = false
-  private static cleanupHandlers = new Map<ProcessCleanupEvent, () => void>()
+
 
   private tasks: Map<string, BackgroundTask>
   private notifications: Map<string, BackgroundTask[]>
@@ -705,8 +702,8 @@ export class BackgroundManager {
       if (!assistantError) return
 
       const errorInfo = {
-        name: this.extractErrorName(assistantError),
-        message: this.extractErrorMessage(assistantError),
+        name: extractErrorName(assistantError),
+        message: extractErrorMessage(assistantError),
       }
       this.tryFallbackRetry(task, errorInfo, "message.updated")
     }
@@ -809,7 +806,7 @@ export class BackgroundManager {
 
       const errorObj = props?.error as { name?: string; message?: string } | undefined
       const errorName = errorObj?.name
-      const errorMessage = props ? this.getSessionErrorMessage(props) : undefined
+      const errorMessage = props ? getSessionErrorMessage(props) : undefined
 
       const errorInfo = { name: errorName, message: errorMessage }
       if (this.tryFallbackRetry(task, errorInfo, "session.error")) return
@@ -934,110 +931,20 @@ export class BackgroundManager {
     errorInfo: { name?: string; message?: string },
     source: string,
   ): boolean {
-    const fallbackChain = task.fallbackChain
-    const canRetry =
-      shouldRetryError(errorInfo) &&
-      fallbackChain &&
-      fallbackChain.length > 0 &&
-      hasMoreFallbacks(fallbackChain, task.attemptCount ?? 0)
-
-    if (!canRetry) return false
-
-    const attemptCount = task.attemptCount ?? 0
-    const providerModelsCache = readProviderModelsCache()
-    const connectedProviders = providerModelsCache?.connected ?? readConnectedProvidersCache()
-    const connectedSet = connectedProviders ? new Set(connectedProviders.map(p => p.toLowerCase())) : null
-
-    const isReachable = (entry: FallbackEntry): boolean => {
-      if (!connectedSet) return true
-
-      // Gate only on provider connectivity. Provider model lists can be stale/incomplete,
-      // especially after users manually add models to opencode.json.
-      return entry.providers.some((p) => connectedSet.has(p.toLowerCase()))
-    }
-
-    let selectedAttemptCount = attemptCount
-    let nextFallback: FallbackEntry | undefined
-    while (fallbackChain && selectedAttemptCount < fallbackChain.length) {
-      const candidate = getNextFallback(fallbackChain, selectedAttemptCount)
-      if (!candidate) break
-      selectedAttemptCount++
-      if (!isReachable(candidate)) {
-        log("[background-agent] Skipping unreachable fallback:", {
-          taskId: task.id,
-          source,
-          model: candidate.model,
-          providers: candidate.providers,
-        })
-        continue
-      }
-      nextFallback = candidate
-      break
-    }
-    if (!nextFallback) return false
-
-    const providerID = selectFallbackProvider(
-      nextFallback.providers,
-      task.model?.providerID,
-    )
-
-    log("[background-agent] Retryable error, attempting fallback:", {
-      taskId: task.id,
+    const result = tryFallbackRetry({
+      task,
+      errorInfo,
       source,
-      errorName: errorInfo.name,
-      errorMessage: errorInfo.message?.slice(0, 100),
-      attemptCount: selectedAttemptCount,
-      nextModel: `${providerID}/${nextFallback.model}`,
+      concurrencyManager: this.concurrencyManager,
+      client: this.client,
+      idleDeferralTimers: this.idleDeferralTimers,
+      queuesByKey: this.queuesByKey,
+      processKey: (key: string) => this.processKey(key),
     })
-
-    if (task.concurrencyKey) {
-      this.concurrencyManager.release(task.concurrencyKey)
-      task.concurrencyKey = undefined
-    }
-
-    if (task.sessionID) {
-      this.client.session.abort({ path: { id: task.sessionID } }).catch(() => {})
+    if (result && task.sessionID) {
       subagentSessions.delete(task.sessionID)
     }
-
-    const idleTimer = this.idleDeferralTimers.get(task.id)
-    if (idleTimer) {
-      clearTimeout(idleTimer)
-      this.idleDeferralTimers.delete(task.id)
-    }
-
-    task.attemptCount = selectedAttemptCount
-    const transformedModelId = transformModelForProvider(providerID, nextFallback.model)
-    task.model = {
-      providerID,
-      modelID: transformedModelId,
-      variant: nextFallback.variant,
-    }
-    task.status = "pending"
-    task.sessionID = undefined
-    task.startedAt = undefined
-    task.queuedAt = new Date()
-    task.error = undefined
-
-    const key = task.model ? `${task.model.providerID}/${task.model.modelID}` : task.agent
-    const queue = this.queuesByKey.get(key) ?? []
-    const retryInput: LaunchInput = {
-      description: task.description,
-      prompt: task.prompt,
-      agent: task.agent,
-      parentSessionID: task.parentSessionID,
-      parentMessageID: task.parentMessageID,
-      parentModel: task.parentModel,
-      parentAgent: task.parentAgent,
-      parentTools: task.parentTools,
-      model: task.model,
-      fallbackChain: task.fallbackChain,
-      category: task.category,
-    }
-    queue.push({ task, input: retryInput })
-    this.queuesByKey.set(key, queue)
-    this.processKey(key)
-    return true
+    return result
   }
 
   markForNotification(task: BackgroundTask): void {
@@ -1256,45 +1163,11 @@ export class BackgroundManager {
   }
 
   private registerProcessCleanup(): void {
-    BackgroundManager.cleanupManagers.add(this)
-
-    if (BackgroundManager.cleanupRegistered) return
-    BackgroundManager.cleanupRegistered = true
-
-    const cleanupAll = () => {
-      for (const manager of BackgroundManager.cleanupManagers) {
-        try {
-          manager.shutdown()
-        } catch (error) {
-          log("[background-agent] Error during shutdown cleanup:", error)
-        }
-      }
-    }
-
-    const registerSignal = (signal: ProcessCleanupEvent, exitAfter: boolean): void => {
-      const listener = registerProcessSignal(signal, cleanupAll, exitAfter)
-      BackgroundManager.cleanupHandlers.set(signal, listener)
-    }
-
-    registerSignal("SIGINT", true)
-    registerSignal("SIGTERM", true)
-    if (process.platform === "win32") {
-      registerSignal("SIGBREAK", true)
-    }
-    registerSignal("beforeExit", false)
-    registerSignal("exit", false)
+    registerManagerForCleanup(this)
   }
 
   private unregisterProcessCleanup(): void {
-    BackgroundManager.cleanupManagers.delete(this)
-
-    if (BackgroundManager.cleanupManagers.size > 0) return
-
-    for (const [signal, listener] of BackgroundManager.cleanupHandlers.entries()) {
-      process.off(signal, listener)
-    }
-    BackgroundManager.cleanupHandlers.clear()
-    BackgroundManager.cleanupRegistered = false
+    unregisterManagerForCleanup(this)
   }
 
 
@@ -1368,7 +1241,7 @@ export class BackgroundManager {
     // Note: Callers must release concurrency before calling this method
     // to ensure slots are freed even if notification fails
 
-    const duration = this.formatDuration(task.startedAt ?? new Date(), task.completedAt)
+    const duration = formatDuration(task.startedAt ?? new Date(), task.completedAt)
 
     log("[background-agent] notifyParentSession called for task:", task.id)
 
@@ -1455,7 +1328,7 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
             if (isCompactionAgent(info?.agent)) {
               continue
             }
-            const normalizedTools = this.isRecord(info?.tools)
+            const normalizedTools = isRecord(info?.tools)
               ? normalizePromptTools(info.tools as Record<string, boolean | "allow" | "deny" | "ask">)
               : undefined
             if (info?.agent || info?.model || (info?.modelID && info?.providerID) || normalizedTools) {
@@ -1466,7 +1339,7 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
             }
           }
         } catch (error) {
-          if (this.isAbortedSessionError(error)) {
+          if (isAbortedSessionError(error)) {
             log("[background-agent] Parent session aborted while loading messages; using messageDir fallback:", {
               taskId: task.id,
               parentSessionID: task.parentSessionID,
@@ -1506,7 +1379,7 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
             noReply: !allComplete,
           })
         } catch (error) {
-          if (this.isAbortedSessionError(error)) {
+          if (isAbortedSessionError(error)) {
             log("[background-agent] Parent session aborted while sending notification; continuing cleanup:", {
               taskId: task.id,
               parentSessionID: task.parentSessionID,
@@ -1544,97 +1417,11 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
   }
 
   private formatDuration(start: Date, end?: Date): string {
-    const duration = (end ?? new Date()).getTime() - start.getTime()
-    const seconds = Math.floor(duration / 1000)
-    const minutes = Math.floor(seconds / 60)
-    const hours = Math.floor(minutes / 60)
-
-    if (hours > 0) {
-      return `${hours}h ${minutes % 60}m ${seconds % 60}s`
-    } else if (minutes > 0) {
-      return `${minutes}m ${seconds % 60}s`
-    }
-    return `${seconds}s`
+    return formatDuration(start, end)
   }
 
   private isAbortedSessionError(error: unknown): boolean {
-    const message = this.getErrorText(error)
-    return message.toLowerCase().includes("aborted")
-  }
-
-  private getErrorText(error: unknown): string {
-    if (!error) return ""
-    if (typeof error === "string") return error
-    if (error instanceof Error) {
-      return `${error.name}: ${error.message}`
-    }
-    if (typeof error === "object" && error !== null) {
-      if ("message" in error && typeof error.message === "string") {
-        return error.message
-      }
-      if ("name" in error && typeof error.name === "string") {
-        return error.name
-      }
-    }
-    return ""
-  }
-
-  private extractErrorName(error: unknown): string | undefined {
-    if (this.isRecord(error) && typeof error["name"] === "string") return error["name"]
-    if (error instanceof Error) return error.name
-    return undefined
-  }
-
-  private extractErrorMessage(error: unknown): string | undefined {
-    if (!error) return undefined
-    if (typeof error === "string") return error
-    if (error instanceof Error) return error.message
-
-    if (this.isRecord(error)) {
-      const dataRaw = error["data"]
-      const candidates: unknown[] = [
-        error,
-        dataRaw,
-        error["error"],
-        this.isRecord(dataRaw) ? (dataRaw as Record<string, unknown>)["error"] : undefined,
-        error["cause"],
-      ]
-
-      for (const candidate of candidates) {
-        if (typeof candidate === "string" && candidate.length > 0) return candidate
-        if (
-          this.isRecord(candidate) &&
-          typeof candidate["message"] === "string" &&
-          candidate["message"].length > 0
-        ) {
-          return candidate["message"]
-        }
-      }
-    }
-
-    try {
-      return JSON.stringify(error)
-    } catch {
-      return String(error)
-    }
-  }
-
-  private isRecord(value: unknown): value is Record<string, unknown> {
-    return typeof value === "object" && value !== null
-  }
-
-  private getSessionErrorMessage(properties: EventProperties): string | undefined {
-    const errorRaw = properties["error"]
-    if (!this.isRecord(errorRaw)) return undefined
-
-    const dataRaw = errorRaw["data"]
-    if (this.isRecord(dataRaw)) {
-      const message = dataRaw["message"]
-      if (typeof message === "string") return message
-    }
-
-    const message = errorRaw["message"]
-    return typeof message === "string" ? message : undefined
+    return isAbortedSessionError(error)
   }
 
   private hasRunningTasks(): boolean {
@@ -1645,25 +1432,12 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
   }
 
   private pruneStaleTasksAndNotifications(): void {
-    const now = Date.now()
-
-    for (const [taskId, task] of this.tasks.entries()) {
-      const wasPending = task.status === "pending"
-      const timestamp = task.status === "pending" 
-        ? task.queuedAt?.getTime() 
-        : task.startedAt?.getTime()
-      
-      if (!timestamp) {
-        continue
-      }
-      
-      const age = now - timestamp
-      if (age > TASK_TTL_MS) {
-        const errorMessage = task.status === "pending"
-          ? "Task timed out while queued (30 minutes)"
-          : "Task timed out after 30 minutes"
-        
-        log("[background-agent] Pruning stale task:", { taskId, status: task.status, age: Math.round(age / 1000) + "s" })
+    pruneStaleTasksAndNotifications({
+      tasks: this.tasks,
+      notifications: this.notifications,
+      onTaskPruned: (taskId, task, errorMessage) => {
+        const wasPending = task.status === "pending"
+        log("[background-agent] Pruning stale task:", { taskId, status: task.status, age: Math.round(((wasPending ? task.queuedAt?.getTime() : task.startedAt?.getTime()) ? (Date.now() - (wasPending ? task.queuedAt!.getTime() : task.startedAt!.getTime())) : 0) / 1000) + "s" })
         task.status = "error"
         task.error = errorMessage
         task.completedAt = new Date()
@@ -1671,7 +1445,6 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
           this.concurrencyManager.release(task.concurrencyKey)
           task.concurrencyKey = undefined
         }
-        // Clean up pendingByParent to prevent stale entries
         this.cleanupPendingByParent(task)
         if (wasPending) {
           const key = task.model
@@ -1698,97 +1471,21 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
           subagentSessions.delete(task.sessionID)
           SessionCategoryRegistry.remove(task.sessionID)
         }
-      }
-    }
-
-    for (const [sessionID, notifications] of this.notifications.entries()) {
-      if (notifications.length === 0) {
-        this.notifications.delete(sessionID)
-        continue
-      }
-      const validNotifications = notifications.filter((task) => {
-        if (!task.startedAt) return false
-        const age = now - task.startedAt.getTime()
-        return age <= TASK_TTL_MS
-      })
-      if (validNotifications.length === 0) {
-        this.notifications.delete(sessionID)
-      } else if (validNotifications.length !== notifications.length) {
-        this.notifications.set(sessionID, validNotifications)
-      }
-    }
+      },
+    })
   }
 
   private async checkAndInterruptStaleTasks(
     allStatuses: Record<string, { type: string }> = {},
   ): Promise<void> {
-    const staleTimeoutMs = this.config?.staleTimeoutMs ?? DEFAULT_STALE_TIMEOUT_MS
-    const messageStalenessMs = this.config?.messageStalenessTimeoutMs ?? DEFAULT_MESSAGE_STALENESS_TIMEOUT_MS
-    const now = Date.now()
-
-    for (const task of this.tasks.values()) {
-      if (task.status !== "running") continue
-
-      const startedAt = task.startedAt
-      const sessionID = task.sessionID
-      if (!startedAt || !sessionID) continue
-
-      const sessionStatus = allStatuses[sessionID]?.type
-      const sessionIsRunning = sessionStatus !== undefined && sessionStatus !== "idle"
-      const runtime = now - startedAt.getTime()
-
-      if (!task.progress?.lastUpdate) {
-        if (sessionIsRunning) continue
-        if (runtime <= messageStalenessMs) continue
-
-        const staleMinutes = Math.round(runtime / 60000)
-        task.status = "cancelled"
-        task.error = `Stale timeout (no activity for ${staleMinutes}min since start)`
-        task.completedAt = new Date()
-
-        if (task.concurrencyKey) {
-          this.concurrencyManager.release(task.concurrencyKey)
-          task.concurrencyKey = undefined
-        }
-
-        this.client.session.abort({ path: { id: sessionID } }).catch(() => {})
-        log(`[background-agent] Task ${task.id} interrupted: no progress since start`)
-
-        try {
-          await this.enqueueNotificationForParent(task.parentSessionID, () => this.notifyParentSession(task))
-        } catch (err) {
-          log("[background-agent] Error in notifyParentSession for stale task:", { taskId: task.id, error: err })
-        }
-        continue
-      }
-
-      if (sessionIsRunning) continue
-
-      if (runtime < MIN_RUNTIME_BEFORE_STALE_MS) continue
-
-      const timeSinceLastUpdate = now - task.progress.lastUpdate.getTime()
-      if (timeSinceLastUpdate <= staleTimeoutMs) continue
-      if (task.status !== "running") continue
-
-      const staleMinutes = Math.round(timeSinceLastUpdate / 60000)
-      task.status = "cancelled"
-      task.error = `Stale timeout (no activity for ${staleMinutes}min)`
-      task.completedAt = new Date()
-
-      if (task.concurrencyKey) {
-        this.concurrencyManager.release(task.concurrencyKey)
-        task.concurrencyKey = undefined
-      }
-
-      this.client.session.abort({ path: { id: sessionID } }).catch(() => {})
-      log(`[background-agent] Task ${task.id} interrupted: stale timeout`)
-
-      try {
-        await this.enqueueNotificationForParent(task.parentSessionID, () => this.notifyParentSession(task))
-      } catch (err) {
-        log("[background-agent] Error in notifyParentSession for stale task:", { taskId: task.id, error: err })
-      }
-    }
+    await checkAndInterruptStaleTasks({
+      tasks: this.tasks.values(),
+      client: this.client,
+      config: this.config,
+      concurrencyManager: this.concurrencyManager,
+      notifyParentSession: (task) => this.enqueueNotificationForParent(task.parentSessionID, () => this.notifyParentSession(task)),
+      sessionStatuses: allStatuses,
+    })
   }
 
   private async pollRunningTasks(): Promise<void> {
@@ -1948,89 +1645,3 @@ Use \`background_output(task_id="${task.id}")\` to retrieve this result when rea
     return current
   }
 }
-
-function registerProcessSignal(
-  signal: ProcessCleanupEvent,
-  handler: () => void,
-  exitAfter: boolean
-): () => void {
-  const listener = () => {
-    handler()
-    if (exitAfter) {
-      // Set exitCode and schedule exit after delay to allow other handlers to complete async cleanup
-      // Use 6s delay to accommodate LSP cleanup (5s timeout + 1s SIGKILL wait)
-      process.exitCode = 0
-      setTimeout(() => process.exit(), 6000)
-    }
-  }
-  process.on(signal, listener)
-  return listener
-}
-
-
-function getMessageDir(sessionID: string): string | null {
-  if (!existsSync(MESSAGE_STORAGE)) return null
-
-  const directPath = join(MESSAGE_STORAGE, sessionID)
-  if (existsSync(directPath)) return directPath
-
-  for (const dir of readdirSync(MESSAGE_STORAGE)) {
-    const sessionPath = join(MESSAGE_STORAGE, dir, sessionID)
-    if (existsSync(sessionPath)) return sessionPath
-  }
-  return null
-}
-
-function isCompactionAgent(agent: string | undefined): boolean {
-  return agent?.trim().toLowerCase() === "compaction"
-}
-
-function hasFullAgentAndModel(message: StoredMessage): boolean {
-  return !!message.agent &&
-    !isCompactionAgent(message.agent) &&
-    !!message.model?.providerID &&
-    !!message.model?.modelID
-}
-
-function hasPartialAgentOrModel(message: StoredMessage): boolean {
-  const hasAgent = !!message.agent && !isCompactionAgent(message.agent)
-  const hasModel = !!message.model?.providerID && !!message.model?.modelID
-  return hasAgent || hasModel
-}
-
-function findNearestMessageExcludingCompaction(messageDir: string): StoredMessage | null {
-  try {
-    const files = readdirSync(messageDir)
-      .filter((name) => name.endsWith(".json"))
-      .sort()
-      .reverse()
-
-    for (const file of files) {
-      try {
-        const content = readFileSync(join(messageDir, file), "utf-8")
-        const parsed = JSON.parse(content) as StoredMessage
-        if (hasFullAgentAndModel(parsed)) {
-          return parsed
-        }
-      } catch {
-        continue
-      }
-    }
-
-    for (const file of files) {
-      try {
-        const content = readFileSync(join(messageDir, file), "utf-8")
-        const parsed = JSON.parse(content) as StoredMessage
-        if (hasPartialAgentOrModel(parsed)) {
-          return parsed
-        }
-      } catch {
-        continue
-      }
-    }
-  } catch {
-    return null
-  }
-
-  return null
-}
diff --git a/src/features/background-agent/notification-builder.ts b/src/features/background-agent/notification-builder.ts
deleted file mode 100644
index f5bffa65..00000000
--- a/src/features/background-agent/notification-builder.ts
+++ /dev/null
@@ -1,41 +0,0 @@
-import type { BackgroundTask } from "./types"
-
-export function buildBackgroundTaskNotificationText(args: {
-  task: BackgroundTask
-  duration: string
-  allComplete: boolean
-  remainingCount: number
-  completedTasks: BackgroundTask[]
-}): string {
-  const { task, duration, allComplete, remainingCount, completedTasks } = args
-  const statusText =
-    task.status === "completed" ? "COMPLETED" : task.status === "interrupt" ? "INTERRUPTED" : task.status === "error" ? "ERROR" : "CANCELLED"
-  const errorInfo = task.error ? `\n**Error:** ${task.error}` : ""
-
-  if (allComplete) {
-    const completedTasksText = completedTasks
-      .map((t) => `- \`${t.id}\`: ${t.description}`)
-      .join("\n")
-
-    return `<system-reminder>
-[ALL BACKGROUND TASKS COMPLETE]
-
-**Completed:**
-${completedTasksText || `- \`${task.id}\`: ${task.description}`}
-
-Use \`background_output(task_id="<id>")\` to retrieve each result.
-</system-reminder>`
-  }
-
-  return `<system-reminder>
-[BACKGROUND TASK ${statusText}]
-**ID:** \`${task.id}\`
-**Description:** ${task.description}
-**Duration:** ${duration}${errorInfo}
-
-**${remainingCount} task${remainingCount === 1 ? "" : "s"} still in progress.** You WILL be notified when ALL complete.
-Do NOT poll - continue productive work.
-
-Use \`background_output(task_id="${task.id}")\` to retrieve this result when ready.
-</system-reminder>`
-}
diff --git a/src/features/background-agent/process-cleanup.test.ts b/src/features/background-agent/process-cleanup.test.ts
new file mode 100644
index 00000000..9560852d
--- /dev/null
+++ b/src/features/background-agent/process-cleanup.test.ts
@@ -0,0 +1,156 @@
+import { describe, test, expect, beforeEach, afterEach, mock } from "bun:test"
+import {
+  registerManagerForCleanup,
+  unregisterManagerForCleanup,
+  _resetForTesting,
+} from "./process-cleanup"
+
+describe("process-cleanup", () => {
+  const registeredManagers: Array<{ shutdown: () => void }> = []
+  const mockShutdown = mock(() => {})
+
+  const processOnCalls: Array<[string, Function]> = []
+  const processOffCalls: Array<[string, Function]> = []
+  const originalProcessOn = process.on.bind(process)
+  const originalProcessOff = process.off.bind(process)
+
+  beforeEach(() => {
+    mockShutdown.mockClear()
+    processOnCalls.length = 0
+    processOffCalls.length = 0
+    registeredManagers.length = 0
+
+    process.on = originalProcessOn as any
+    process.off = originalProcessOff as any
+    _resetForTesting()
+
+    process.on = ((event: string, listener: Function) => {
+      processOnCalls.push([event, listener])
+      return process
+    }) as any
+
+    process.off = ((event: string, listener: Function) => {
+      processOffCalls.push([event, listener])
+      return process
+    }) as any
+  })
+
+  afterEach(() => {
+    process.on = originalProcessOn as any
+    process.off = originalProcessOff as any
+
+    for (const manager of [...registeredManagers]) {
+      unregisterManagerForCleanup(manager)
+    }
+  })
+
+  describe("registerManagerForCleanup", () => {
+    test("registers signal handlers on first manager", () => {
+      const manager = { shutdown: mockShutdown }
+      registeredManagers.push(manager)
+
+      registerManagerForCleanup(manager)
+
+      const signals = processOnCalls.map(([signal]) => signal)
+      expect(signals).toContain("SIGINT")
+      expect(signals).toContain("SIGTERM")
+      expect(signals).toContain("beforeExit")
+      expect(signals).toContain("exit")
+    })
+
+    test("signal listener calls shutdown on registered manager", () => {
+      const manager = { shutdown: mockShutdown }
+      registeredManagers.push(manager)
+
+      registerManagerForCleanup(manager)
+
+      const [, listener] = processOnCalls[0]
+      listener()
+
+      expect(mockShutdown).toHaveBeenCalled()
+    })
+
+    test("multiple managers all get shutdown when signal fires", () => {
+      const shutdown1 = mock(() => {})
+      const shutdown2 = mock(() => {})
+      const shutdown3 = mock(() => {})
+      const manager1 = { shutdown: shutdown1 }
+      const manager2 = { shutdown: shutdown2 }
+      const manager3 = { shutdown: shutdown3 }
+      registeredManagers.push(manager1, manager2, manager3)
+
+      registerManagerForCleanup(manager1)
+      registerManagerForCleanup(manager2)
+      registerManagerForCleanup(manager3)
+
+      const [, listener] = processOnCalls[0]
+      listener()
+
+      expect(shutdown1).toHaveBeenCalledTimes(1)
+      expect(shutdown2).toHaveBeenCalledTimes(1)
+      expect(shutdown3).toHaveBeenCalledTimes(1)
+    })
+
+    test("does not re-register signal handlers for subsequent managers", () => {
+      const manager1 = { shutdown: mockShutdown }
+      const manager2 = { shutdown: mockShutdown }
+      registeredManagers.push(manager1, manager2)
+
+      registerManagerForCleanup(manager1)
+      const callsAfterFirst = processOnCalls.length
+
+      registerManagerForCleanup(manager2)
+
+      expect(processOnCalls.length).toBe(callsAfterFirst)
+    })
+  })
+
+  describe("unregisterManagerForCleanup", () => {
+    test("removes signal handlers when last manager unregisters", () => {
+      const manager = { shutdown: mockShutdown }
+      registeredManagers.push(manager)
+
+      registerManagerForCleanup(manager)
+      unregisterManagerForCleanup(manager)
+      registeredManagers.length = 0
+
+      const offSignals = processOffCalls.map(([signal]) => signal)
+      expect(offSignals).toContain("SIGINT")
+      expect(offSignals).toContain("SIGTERM")
+      expect(offSignals).toContain("beforeExit")
+      expect(offSignals).toContain("exit")
+    })
+
+    test("keeps signal handlers when other managers remain", () => {
+      const manager1 = { shutdown: mockShutdown }
+      const manager2 = { shutdown: mockShutdown }
+      registeredManagers.push(manager1, manager2)
+
+      registerManagerForCleanup(manager1)
+      registerManagerForCleanup(manager2)
+
+      unregisterManagerForCleanup(manager2)
+
+      expect(processOffCalls.length).toBe(0)
+    })
+
+    test("remaining managers still get shutdown after partial unregister", () => {
+      const shutdown1 = mock(() => {})
+      const shutdown2 = mock(() => {})
+      const manager1 = { shutdown: shutdown1 }
+      const manager2 = { shutdown: shutdown2 }
+      registeredManagers.push(manager1, manager2)
+
+      registerManagerForCleanup(manager1)
+      registerManagerForCleanup(manager2)
+
+      const [, listener] = processOnCalls[0]
+      unregisterManagerForCleanup(manager2)
+
+      listener()
+
+      expect(shutdown1).toHaveBeenCalledTimes(1)
+      expect(shutdown2).not.toHaveBeenCalled()
+    })
+  })
+})
diff --git a/src/features/background-agent/process-cleanup.ts b/src/features/background-agent/process-cleanup.ts
new file mode 100644
index 00000000..e5d43214
--- /dev/null
+++ b/src/features/background-agent/process-cleanup.ts
@@ -0,0 +1,81 @@
+import { log } from "../../shared"
+
+type ProcessCleanupEvent = NodeJS.Signals | "beforeExit" | "exit"
+
+function registerProcessSignal(
+  signal: ProcessCleanupEvent,
+  handler: () => void,
+  exitAfter: boolean
+): () => void {
+  const listener = () => {
+    handler()
+    if (exitAfter) {
+      process.exitCode = 0
+      setTimeout(() => process.exit(), 6000)
+    }
+  }
+  process.on(signal, listener)
+  return listener
+}
+
+interface CleanupTarget {
+  shutdown(): void
+}
+
+const cleanupManagers = new Set<CleanupTarget>()
+let cleanupRegistered = false
+const cleanupHandlers = new Map<ProcessCleanupEvent, () => void>()
+
+export function registerManagerForCleanup(manager: CleanupTarget): void {
+  cleanupManagers.add(manager)
+
+  if (cleanupRegistered) return
+  cleanupRegistered = true
+
+  const cleanupAll = () => {
+    for (const m of cleanupManagers) {
+      try {
+        m.shutdown()
+      } catch (error) {
+        log("[background-agent] Error during shutdown cleanup:", error)
+      }
+    }
+  }
+
+  const registerSignal = (signal: ProcessCleanupEvent, exitAfter: boolean): void => {
+    const listener = registerProcessSignal(signal, cleanupAll, exitAfter)
+    cleanupHandlers.set(signal, listener)
+  }
+
+  registerSignal("SIGINT", true)
+  registerSignal("SIGTERM", true)
+  if (process.platform === "win32") {
+    registerSignal("SIGBREAK", true)
+  }
+  registerSignal("beforeExit", false)
+  registerSignal("exit", false)
+}
+
+export function unregisterManagerForCleanup(manager: CleanupTarget): void {
+  cleanupManagers.delete(manager)
+
+  if (cleanupManagers.size > 0) return
+
+  for (const [signal, listener] of cleanupHandlers.entries()) {
+    process.off(signal, listener)
+  }
+  cleanupHandlers.clear()
+  cleanupRegistered = false
+}
+
+/** @internal — test-only reset for module-level singleton state */
+export function _resetForTesting(): void {
+  for (const manager of [...cleanupManagers]) {
+    cleanupManagers.delete(manager)
+  }
+  for (const [signal, listener] of cleanupHandlers.entries()) {
+    process.off(signal, listener)
+  }
+  cleanupHandlers.clear()
+  cleanupRegistered = false
+}