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The v2 set_default_project_by_id handler fetched the current default solely to echo it as old_project in the response, and raised 404 "No default project is currently set" when none existed. That guard (marked # pragma: no cover, never tested) made the bootstrap/recovery case impossible: with no default row in the DB, `bm project default <name>` always failed -- yet that is exactly the command you reach for when no default is set. ProjectStatusResponse.old_project is already Optional, so the guard served no schema requirement. Remove it and build old_project only when a previous default exists, else pass None. Add a regression test that clears is_default, sets a default via the endpoint, and asserts 200, old_project is None, the new project is default, and a follow-up read-back returns it. Closes #975 Co-Authored-By: Claude <noreply@anthropic.com> Signed-off-by: Drew Cain <groksrc@gmail.com>