diff --git a/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.test.ts b/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.test.ts
index fc35202575a4..74da854e8f8a 100644
--- a/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.test.ts
+++ b/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.test.ts
@@ -81,6 +81,7 @@ describe('L2BlockStream', () => {
 
       await blockStream.work();
       expect(blockSource.getPublishedBlocks).toHaveBeenCalledTimes(5);
+      expect(handler.callCount).toEqual(5);
       expect(handler.events).toEqual([
         { type: 'blocks-added', blocks: times(10, i => makeBlock(i + 1)) },
         { type: 'blocks-added', blocks: times(10, i => makeBlock(i + 11)) },
@@ -99,6 +100,19 @@ describe('L2BlockStream', () => {
       expect(handler.events).toEqual([{ type: 'blocks-added', blocks: times(10, i => makeBlock(i + 1)) }]);
     });
 
+    it('halts on handler error and retries', async () => {
+      setRemoteTips(45);
+
+      handler.throwing = true;
+      await blockStream.work();
+      expect(handler.callCount).toEqual(1);
+
+      handler.throwing = false;
+      await blockStream.work();
+      expect(handler.callCount).toEqual(6);
+      expect(handler.events).toHaveLength(5);
+    });
+
     it('handles a reorg and requests blocks from new tip', async () => {
       setRemoteTips(45);
       localData.latest.number = 40;
@@ -133,8 +147,14 @@ describe('L2BlockStream', () => {
 
 class TestL2BlockStreamEventHandler implements L2BlockStreamEventHandler {
   public readonly events: L2BlockStreamEvent[] = [];
+  public throwing: boolean = false;
+  public callCount: number = 0;
 
   handleBlockStreamEvent(event: L2BlockStreamEvent): Promise<void> {
+    this.callCount++;
+    if (this.throwing) {
+      throw new Error('Handler error');
+    }
     this.events.push(event);
     return Promise.resolve();
   }
diff --git a/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.ts b/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.ts
index e18d52b58705..792229d2cb42 100644
--- a/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.ts
+++ b/yarn-project/stdlib/src/block/l2_block_downloader/l2_block_stream.ts
@@ -93,8 +93,6 @@ export class L2BlockStream {
       }
 
       // Update the proven and finalized tips.
-      // TODO(palla/reorg): Should we emit this before passing the new blocks? This would allow world-state to skip
-      // building the data structures for the pending chain if it's unneeded.
       if (localTips.proven !== undefined && sourceTips.proven.number !== localTips.proven.number) {
         await this.emitEvent({ type: 'chain-proven', blockNumber: sourceTips.proven.number });
       }
diff --git a/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.test.ts b/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.test.ts
index 850b1988b58e..22df0de12af8 100644
--- a/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.test.ts
+++ b/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.test.ts
@@ -209,6 +209,12 @@ describe('ServerWorldStateSynchronizer', () => {
   it('throws if you try to immediate sync when not running', async () => {
     await expect(server.syncImmediate(3)).rejects.toThrow(/is not running/i);
   });
+
+  it('throws if handling blocks fails', async () => {
+    void server.start();
+    merkleTreeDb.handleL2BlockAndMessages.mockRejectedValue(new Error('Test error'));
+    await expect(pushBlocks(1, 5)).rejects.toThrow(/Test error/i);
+  });
 });
 
 class TestWorldStateSynchronizer extends ServerWorldStateSynchronizer {
diff --git a/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.ts b/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.ts
index 458953151c2d..19083e679c60 100644
--- a/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.ts
+++ b/yarn-project/world-state/src/synchronizer/server_world_state_synchronizer.ts
@@ -207,23 +207,19 @@ export class ServerWorldStateSynchronizer
 
   /** Handles an event emitted by the block stream. */
   public async handleBlockStreamEvent(event: L2BlockStreamEvent): Promise<void> {
-    try {
-      switch (event.type) {
-        case 'blocks-added':
-          await this.handleL2Blocks(event.blocks.map(b => b.block));
-          break;
-        case 'chain-pruned':
-          await this.handleChainPruned(event.blockNumber);
-          break;
-        case 'chain-proven':
-          await this.handleChainProven(event.blockNumber);
-          break;
-        case 'chain-finalized':
-          await this.handleChainFinalized(event.blockNumber);
-          break;
-      }
-    } catch (err) {
-      this.log.error('Error processing block stream', err);
+    switch (event.type) {
+      case 'blocks-added':
+        await this.handleL2Blocks(event.blocks.map(b => b.block));
+        break;
+      case 'chain-pruned':
+        await this.handleChainPruned(event.blockNumber);
+        break;
+      case 'chain-proven':
+        await this.handleChainProven(event.blockNumber);
+        break;
+      case 'chain-finalized':
+        await this.handleChainFinalized(event.blockNumber);
+        break;
     }
   }