Good news. This looks to be a simulator problem. I updated my watch to watchOS 8 and the app works as expected on real hardware!

Just filed https://feedbackassistant.apple.com/feedback/8986729. I refactored the SpeedySloth sample app to respond to handleActiveWorkoutRecovery() being called while crashing during an active workout. Let me know if you need anything else. Thanks!

@maxzoech: handleActiveWorkoutRecovery() is working for you on watchOS 7.3? Are you using SwiftUI?