A system and method for managing a reduction in capacity of a memory sub-system. An example method involving a memory sub-system: detecting a failure of a plurality of memory devices of the set, wherein the failure causes data of the plurality of memory devices to be inaccessible; determining the capacity of the set of memory devices has changed to a reduced capacity; notifying a host system of the reduced capacity, wherein the notifying indicates a set of storage units comprising the data that is inaccessible; recovering the data of the set of storage units from the host system after the failure; and updating the set of memory devices to store the recovered data and to change the capacity to the reduced capacity.