diff --git a/recipes-phosphor/preinit-mounts/preinit-mounts/init b/recipes-phosphor/preinit-mounts/preinit-mounts/init
index 818a320..ad81327 100644
--- a/recipes-phosphor/preinit-mounts/preinit-mounts/init
+++ b/recipes-phosphor/preinit-mounts/preinit-mounts/init
@@ -6,6 +6,21 @@
   fi
 }
 
+recreate_overlay() {
+  # Attempt to re-create the overlay by moving out the overlay contents and
+  # copying them back to /etc, which would create them back in the overlay
+  cd
+  if ! umount /etc; then
+    return
+  fi
+  rm -rf /var/persist/etc-save
+  mv /var/persist/etc /var/persist/etc-save
+  mkdir -p /var/persist/etc
+  mount_overlay
+  cp -rp /var/persist/etc-save/* /etc/
+  rm -rf /var/persist/etc-save
+}
+
 if ! mount ubi0:rwfs /var -t ubifs -o defaults; then
   if ! mount ubi0:rwfs /var -t ubifs -o defaults,ro; then
     mount tmpfs /var -t tmpfs -o defaults
@@ -23,25 +38,25 @@
 # Check if there are any issues accessing the files in /etc after mounting the
 # overlay by doing an 'ls' command
 error="/var/overlay-error"
+recreate_overlay_done=
 cd /var/persist/etc/
-for i in *; do
-  # Only check regular files at the top of the directory
-  if [[ -f $i ]]; then
+files=$(find . -type f)
+for i in $files; do
+  ls -i /etc/$i >/dev/null 2>${error};
+  if [[ -s ${error} ]]; then
+    # We don't have a way to print this error to the journal, delete it
+    rm -f ${error}
+    if test -n "$recreate_overlay_done"; then
+      recreate_overlay
+      recreate_overlay_done="true"
+    fi
+    # Check file once more
     ls -i /etc/$i >/dev/null 2>${error};
     if [[ -s ${error} ]]; then
-      # We don't have a way to print this error to the journal, delete it
+      # File still corrupted, delete it from the overlay
+      echo "Removing corrupted file from overlay: $i"
       rm -f ${error}
-      # Attempt to re-create the overlay by moving out the overlay contents and
-      # copying them back to /etc, which would create them back in the overlay
-      cd
-      umount /etc
-      rm -rf /var/persist/etc-save
-      mv /var/persist/etc /var/persist/etc-save
-      mkdir -p /var/persist/etc
-      mount_overlay
-      cp -rp /var/persist/etc-save/* /etc/
-      rm -rf /var/persist/etc-save
-      break
+      rm -f /var/persist/etc/$i
     fi
   fi
 done