It turns out that someone working on the film (who, understandably, will probably never identify themselves and take this particular secret to their grave) had accidentally activated a command on Pixar's main server to clean up unwanted files. But because computers are actually pretty stupid when you get down to it, the server identified the "unwanted files" as the entirety of Toy Story 2. For scale, imagine you're working on a school assignment and, a few thousand words in, you accidentally delete the file. Now imagine that your assignment has a budget of a hundred million dollars and the file you deleted represents the massive collaborative effort of a few hundred people. "Murder via brick" would absolutely be a punishment you'd expect.
"Uh ... my slinky dog ate it ..."
To make things worse, it turned out that all the backup files had also been corrupted for unrelated reasons, so it seemed that the production had been suddenly ripped right back to square one. But miraculously, the supervising technical director, Galyn Susman, had backup copies of most of the lost files on her home computer. She'd been working on the project from home due to recently having a baby, and also presumably sought to pay for her child's college by selling enough pirated copies to fill several commercial refrigerators.