This is a clone of issue OCPBUGS-59194. The following is the description of the original issue:
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Description:When deleting a HostedCluster on ARO HCP (Azure Red Hat OpenShift Hosted Control Plane), the CLI operation sometimes fails due to a validation error related to the Image Registry operator configuration.Error Message:

lastTransitionTime: "2025-07-10T11:09:01Z"message: 'Error: failed to update image registry management state: configs.imageregistry.operator.openshift.io "cluster" is forbidden: ValidatingAdmissionPolicy 'deny-removed-managementstate' with binding 'deny-removed-managementstate-binding' denied request: Setting managementState to 'Removed' is not allowed in Image Registry config.'observedGeneration: 3reason: ErrorOccurredstatus: "False"type: CloudResourcesDestroyed

Expected Behavior:

• The HostedCluster deletion should complete successfully

• The Image Registry operator configuration should be properly cleaned up during deletion

Actual Behavior:

• The deletion fails due to a ValidatingAdmissionPolicy preventing the Image Registry managementState from being set to 'Removed'

• The CloudResourcesDestroyed condition reports failure

Impact:

• Users cannot cleanly delete their HostedClusters

• May lead to orphaned resources

• Affects cluster lifecycle management

Steps to Reproduce:

1. Create a HostedCluster on ARO HCP

1. Attempt to delete the HostedCluster using the CLI

1. Observe the deletion failure with the above error

Additional Notes:

• The ValidatingAdmissionPolicy 'deny-removed-managementstate' is blocking a legitimate operation during cluster deletion

• This should be handled gracefully during the deletion process

• The validation policy may need to be adjusted to allow this state during cluster deletion