@@ -143,9 +143,13 @@ Feature: Recover cluster extension from errors that might occur during its lifet
143143 And resource "deployment/test-operator" is available
144144 And resource "configmap/test-configmap" is available
145145 # Catalog deletion triggers automatic reconciliation via ClusterCatalog watch
146- # Wait for reconciliation to complete by checking the status condition
147146 When ClusterCatalog "test" is deleted
148- Then ClusterExtension reports Installed as True
147+ # Wait for reconciliation to complete after catalog deletion by checking for Progressing=Retrying.
148+ # This is necessary because Installed=True both before and after catalog deletion, so we need
149+ # a condition that changes during reconciliation to prove that the fallback logic executed.
150+ # The controller sets Reason=Retrying when falling back to the installed bundle (see handleResolutionError).
151+ Then ClusterExtension reports Progressing as True with Reason Retrying
152+ And ClusterExtension reports Installed as True
149153 And resource "deployment/test-operator" is available
150154 And resource "configmap/test-configmap" is available
151155
@@ -222,8 +226,11 @@ Feature: Recover cluster extension from errors that might occur during its lifet
222226 "olm.operatorframework.io/metadata.name": test-catalog
223227 """
224228 # Wait for reconciliation of the updated spec (config change should succeed without catalog)
225- And ClusterExtension is available
226- Then ClusterExtension reports Installed as True
229+ # Check that the controller processed the spec update by waiting for Progressing=Retrying
230+ # (which is set during fallback reconciliation when catalog is unavailable)
231+ And ClusterExtension reports Progressing as True with Reason Retrying
232+ Then ClusterExtension is available
233+ And ClusterExtension reports Installed as True
227234
228235 Scenario : Version upgrade does not proceed when catalog does not exist
229236 Given ServiceAccount "olm-sa" with needed permissions is available in ${TEST_NAMESPACE}
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