I don't actually have this situation yet.
In fact I've never made a knife. But I'm becoming very interested in beginning to do so, and having seen a couple of failed Damascus blades a friend made that pinged on the quench, I was just curious if one can salvage anything in that situation.
I'm guessing that if you've created a sanmai that re-folding a failed knife into a new damascus billet might not be so great because you'd have the single piece of harder steel in the mix now? Or could you just anneal it and it'd all soften enough to become part of some new cladding? (Yup, I'm aware that I'm enough of a total newb that this may be a dumb question, but I've never let that stop me.)