This was a failure of product management and, doubly so, engineering management. A PM working in software absolutely needs to understand the concept of technical debt. Not necessarily to know where the debt is on their own, but to work closely with engineers on understanding and managing it along with product functionality. That said, I reserve most of my scorn for the eng manager. This is the person whose duty it is to say that yes, in fact 20% is the right proportion for tech debt work after it's been neglected for so long. This is the person to stand up to leadership and explain why this is necessary.

Autonomous teams with bottom-up decision making are much more likely to push towards the right thing even with clueless management, whereas there is little hope when incompetent decisions are fed to the team in a top-down manner (yes, autonomous teams indeed exist - though they are typically a sign of competent management).