Short answer
The useful part first.
If one vessel breaks, your Living Spark can still possess another vessel. If the whole crew is lost before extraction, unsecured loot from that run is lost. Progress already secured in earlier runs remains safe. The developers recommend a fresh full-release save even though older demo or pre-release saves may still load.
Broken vessel vs. full-party wipe
Vessel breaks
The run may continue.
Your Spark escapes the destroyed body. If it reaches another vessel, you can possess that body and keep going.
Entire crew is lost
Unsecured run loot is lost.
A full wipe before extraction ends the run. Resources and loot not yet secured are gone; previously secured progress is not reset.
Should you keep a demo or pre-release save?
The official FAQ says older saves may load in the release build, but the developers recommend starting a fresh save. Their reason is practical: quests, balance, and progression changed significantly before launch. If an old save behaves strangely, a clean save is the developer-recommended baseline—not a claim that every old save is corrupt.
Recent save-related patches
Official patch notes on August 9 addressed an offline save-loading issue and a case where loading a save could place the player in a black void. The same patch cycle also fixed key bindings not saving. Install the latest Steam build before diagnosing a repeat of those launch issues.
Before changing save files
The official sources linked here do not provide a supported save-file location, manual restore method, or file-editing procedure. Using the wrong directory or format can destroy progress; do not move or edit files based on a guessed path.