diff --git a/src/validators/commands/consolidate.py b/src/validators/commands/consolidate.py
index 1c33881b..f90f391f 100644
--- a/src/validators/commands/consolidate.py
+++ b/src/validators/commands/consolidate.py
@@ -337,12 +337,12 @@ async def process(
             source_public_keys=source_public_keys,
             target_public_key=target_public_key,
         )
-    consolidation_manager = await ConsolidationManager.create(
-        consolidation_keys=consolidation_keys,
-        chain_head=chain_head,
-        exclude_public_keys=exclude_public_keys,
-    )
     try:
+        consolidation_manager = await ConsolidationManager.create(
+            consolidation_keys=consolidation_keys,
+            chain_head=chain_head,
+            exclude_public_keys=exclude_public_keys,
+        )
         target_source = consolidation_manager.get_target_source()
     except ConsolidationError as e:
         raise click.ClickException(str(e))
diff --git a/src/validators/commands/tests/test_consolidate.py b/src/validators/commands/tests/test_consolidate.py
index 15a78c5d..b9a71212 100644
--- a/src/validators/commands/tests/test_consolidate.py
+++ b/src/validators/commands/tests/test_consolidate.py
@@ -1,12 +1,87 @@
 from pathlib import Path
+from typing import Generator
+from unittest import mock
 from unittest.mock import AsyncMock, patch
 
+import pytest
 from click.testing import CliRunner
 from sw_utils.tests import faker
 
+from src.common.tests.factories import create_chain_head
 from src.config.networks import HOODI
 from src.config.settings import DEFAULT_MAX_CONSOLIDATION_REQUEST_FEE_GWEI
 from src.validators.commands.consolidate import consolidate
+from src.validators.exceptions import ConsolidationError
+
+
+@pytest.fixture
+def _patch_check_validators_manager() -> Generator:
+    with mock.patch(
+        'src.validators.commands.consolidate.check_validators_manager',
+        return_value=None,
+    ):
+        yield
+
+
+@pytest.fixture
+def _patch_check_consolidations_queue() -> Generator:
+    with mock.patch(
+        'src.validators.commands.consolidate._check_consolidations_queue',
+        return_value=None,
+    ):
+        yield
+
+
+@pytest.fixture
+def _patch_get_chain_latest_head() -> Generator:
+    with mock.patch(
+        'src.validators.commands.consolidate.get_chain_latest_head',
+        return_value=create_chain_head(),
+    ):
+        yield
+
+
+@pytest.mark.usefixtures(
+    '_patch_check_validators_manager',
+    '_patch_check_consolidations_queue',
+    '_patch_get_chain_latest_head',
+)
+class TestConsolidate:
+    @pytest.mark.usefixtures('fake_settings', 'setup_test_clients')
+    def test_create_consolidation_error_is_wrapped_in_click_exception(
+        self,
+        vault_address: str,
+        consensus_endpoints: str,
+        execution_endpoints: str,
+        data_dir: Path,
+        runner: CliRunner,
+    ):
+        """`ConsolidationManager.create` can raise `ConsolidationError` (e.g. an in-flight
+        pending consolidation with an unresolvable source balance); it must surface as a clean
+        `click.ClickException`, not fall through to the generic verbose-error handler."""
+        args = [
+            '--vault',
+            vault_address,
+            '--network',
+            HOODI,
+            '--consensus-endpoints',
+            consensus_endpoints,
+            '--execution-endpoints',
+            execution_endpoints,
+            '--data-dir',
+            str(data_dir),
+            '--no-confirm',
+        ]
+        with mock.patch(
+            'src.validators.commands.consolidate.ConsolidationManager'
+        ) as consolidation_manager:
+            consolidation_manager.create = mock.AsyncMock(
+                side_effect=ConsolidationError('boom message')
+            )
+            result = runner.invoke(consolidate, args)
+
+        assert result.exit_code != 0
+        assert 'Error: boom message' in result.output
 
 
 def test_empty_source_public_keys_file_raises(