diff --git a/apps/files_encryption/hooks/hooks.php b/apps/files_encryption/hooks/hooks.php
index 6e375f99a8..f538d38fad 100644
--- a/apps/files_encryption/hooks/hooks.php
+++ b/apps/files_encryption/hooks/hooks.php
@@ -51,16 +51,16 @@ class Hooks {
 		$view = new \OC\Files\View('/');
 
 		// ensure filesystem is loaded
-		if(!\OC\Files\Filesystem::$loaded) {
+		if (!\OC\Files\Filesystem::$loaded) {
 			\OC_Util::setupFS($params['uid']);
 		}
 
 		$privateKey = \OCA\Encryption\Keymanager::getPrivateKey($view, $params['uid']);
 
 		// if no private key exists, check server configuration
-		if(!$privateKey) {
+		if (!$privateKey) {
 			//check if all requirements are met
-			if(!Helper::checkRequirements() || !Helper::checkConfiguration()) {
+			if (!Helper::checkRequirements() || !Helper::checkConfiguration()) {
 				$error_msg = $l->t("Missing requirements.");
 				$hint = $l->t('Please make sure that PHP 5.3.3 or newer is installed and that OpenSSL together with the PHP extension is enabled and configured properly. For now, the encryption app has been disabled.');
 				\OC_App::disable('files_encryption');
@@ -90,6 +90,8 @@ class Hooks {
 			return false;
 		}
 
+		$result = true;
+
 		// If migration not yet done
 		if ($ready) {
 
@@ -97,15 +99,12 @@ class Hooks {
 
 			// Set legacy encryption key if it exists, to support
 			// depreciated encryption system
-			if (
-				$userView->file_exists('encryption.key')
-				&& $encLegacyKey = $userView->file_get_contents('encryption.key')
-			) {
+			$encLegacyKey = $userView->file_get_contents('encryption.key');
+			if ($encLegacyKey) {
 
 				$plainLegacyKey = Crypt::legacyDecrypt($encLegacyKey, $params['password']);
 
 				$session->setLegacyKey($plainLegacyKey);
-
 			}
 
 			// Encrypt existing user files
@@ -113,26 +112,24 @@ class Hooks {
 				$result = $util->encryptAll('/' . $params['uid'] . '/' . 'files', $session->getLegacyKey(), $params['password']);
 			} catch (\Exception $ex) {
 				\OCP\Util::writeLog('Encryption library', 'Initial encryption failed! Error: ' . $ex->getMessage(), \OCP\Util::FATAL);
-				$util->resetMigrationStatus();
-				\OCP\User::logout();
 				$result = false;
 			}
 
 			if ($result) {
-
 				\OC_Log::write(
-					'Encryption library', 'Encryption of existing files belonging to "' . $params['uid'] . '" completed'
-					, \OC_Log::INFO
-				);
-
+						'Encryption library', 'Encryption of existing files belonging to "' . $params['uid'] . '" completed'
+						, \OC_Log::INFO
+					);
 				// Register successful migration in DB
 				$util->finishMigration();
-
+			} else  {
+				\OCP\Util::writeLog('Encryption library', 'Initial encryption failed!', \OCP\Util::FATAL);
+				$util->resetMigrationStatus();
+				\OCP\User::logout();
 			}
 		}
 
-		return true;
-
+		return $result;
 	}
 
 	/**
diff --git a/apps/files_encryption/lib/util.php b/apps/files_encryption/lib/util.php
index d20efc3ac7..fecdef2881 100644
--- a/apps/files_encryption/lib/util.php
+++ b/apps/files_encryption/lib/util.php
@@ -303,7 +303,7 @@ class Util {
 	 * Find all files and their encryption status within a directory
 	 * @param string $directory The path of the parent directory to search
 	 * @param bool $found the founded files if called again
-	 * @return mixed false if 0 found, array on success. Keys: name, path
+	 * @return array keys: plain, encrypted, legacy, broken
 	 * @note $directory needs to be a path relative to OC data dir. e.g.
 	 *       /admin/files NOT /backup OR /home/www/oc/data/admin/files
 	 */
@@ -322,11 +322,8 @@ class Util {
 			);
 		}
 
-		if (
-			$this->view->is_dir($directory)
-			&& $handle = $this->view->opendir($directory)
-		) {
-			if(is_resource($handle)) {
+		if ($this->view->is_dir($directory) && $handle = $this->view->opendir($directory)){
+			if (is_resource($handle)) {
 				while (false !== ($file = readdir($handle))) {
 
 					if ($file !== "." && $file !== "..") {
@@ -390,34 +387,16 @@ class Util {
 									'name' => $file,
 									'path' => $relPath
 								);
-
 							}
-
 						}
-
 					}
-
 				}
 			}
-
-			\OC_FileProxy::$enabled = true;
-
-			if (empty($found)) {
-
-				return false;
-
-			} else {
-
-				return $found;
-
-			}
-
 		}
 
 		\OC_FileProxy::$enabled = true;
 
-		return false;
-
+		return $found;
 	}
 
 	/**
@@ -571,28 +550,6 @@ class Util {
 		return $result;
 	}
 
-
-	/**
-	 * @param string $path
-	 * @return bool
-	 */
-	public function isSharedPath($path) {
-
-		$trimmed = ltrim($path, '/');
-		$split = explode('/', $trimmed);
-
-		if (isset($split[2]) && $split[2] === 'Shared') {
-
-			return true;
-
-		} else {
-
-			return false;
-
-		}
-
-	}
-
 	/**
 	 * encrypt versions from given file
 	 * @param array $filelist list of encrypted files, relative to data/user/files
@@ -808,121 +765,119 @@ class Util {
 	 */
 	public function encryptAll($dirPath, $legacyPassphrase = null, $newPassphrase = null) {
 
+		$result = true;
+
 		$found = $this->findEncFiles($dirPath);
 
-		if ($found) {
+		// Disable proxy to prevent file being encrypted twice
+		\OC_FileProxy::$enabled = false;
 
-			// Disable proxy to prevent file being encrypted twice
-			\OC_FileProxy::$enabled = false;
+		$versionStatus = \OCP\App::isEnabled('files_versions');
+		\OC_App::disable('files_versions');
 
-			$versionStatus = \OCP\App::isEnabled('files_versions');
-			\OC_App::disable('files_versions');
+		$encryptedFiles = array();
 
-			$encryptedFiles = array();
+		// Encrypt unencrypted files
+		foreach ($found['plain'] as $plainFile) {
 
-			// Encrypt unencrypted files
-			foreach ($found['plain'] as $plainFile) {
+			//get file info
+			$fileInfo = \OC\Files\Filesystem::getFileInfo($plainFile['path']);
 
-				//get file info
-				$fileInfo = \OC\Files\Filesystem::getFileInfo($plainFile['path']);
+			//relative to data/<user>/file
+			$relPath = $plainFile['path'];
 
-				//relative to data/<user>/file
-				$relPath = $plainFile['path'];
+			//relative to /data
+			$rawPath = '/' . $this->userId . '/files/' . $plainFile['path'];
 
-				//relative to /data
-				$rawPath = '/' . $this->userId . '/files/' . $plainFile['path'];
+			// keep timestamp
+			$timestamp = $fileInfo['mtime'];
 
-				// keep timestamp
-				$timestamp = $fileInfo['mtime'];
+			// Open plain file handle for binary reading
+			$plainHandle = $this->view->fopen($rawPath, 'rb');
 
-				// Open plain file handle for binary reading
-				$plainHandle = $this->view->fopen($rawPath, 'rb');
+			// Open enc file handle for binary writing, with same filename as original plain file
+			$encHandle = fopen('crypt://' . $rawPath . '.part', 'wb');
+
+			if (is_resource($encHandle) && is_resource($plainHandle)) {
+				// Move plain file to a temporary location
+				$size = stream_copy_to_stream($plainHandle, $encHandle);
+
+				fclose($encHandle);
+				fclose($plainHandle);
+
+				$fakeRoot = $this->view->getRoot();
+				$this->view->chroot('/' . $this->userId . '/files');
+
+				$this->view->rename($relPath . '.part', $relPath);
+
+				// set timestamp
+				$this->view->touch($relPath, $timestamp);
+
+				$encSize = $this->view->filesize($relPath);
+
+				$this->view->chroot($fakeRoot);
+
+				// Add the file to the cache
+				\OC\Files\Filesystem::putFileInfo($relPath, array(
+					'encrypted' => true,
+					'size' => $encSize,
+					'unencrypted_size' => $size,
+					'etag' => $fileInfo['etag']
+				));
+
+				$encryptedFiles[] = $relPath;
+			} else {
+				\OCP\Util::writeLog('files_encryption', 'initial encryption: could not encrypt ' . $rawPath, \OCP\Util::FATAL);
+				$result = false;
+			}
+		}
+
+		// Encrypt legacy encrypted files
+		if (!empty($legacyPassphrase) && !empty($newPassphrase)) {
+
+			foreach ($found['legacy'] as $legacyFile) {
+
+				// Fetch data from file
+				$legacyData = $this->view->file_get_contents($legacyFile['path']);
+
+				// decrypt data, generate catfile
+				$decrypted = Crypt::legacyBlockDecrypt($legacyData, $legacyPassphrase);
+
+				$rawPath = $legacyFile['path'];
+
+				// enable proxy the ensure encryption is handled
+				\OC_FileProxy::$enabled = true;
 
 				// Open enc file handle for binary writing, with same filename as original plain file
-				$encHandle = fopen('crypt://' . $rawPath . '.part', 'wb');
+				$encHandle = $this->view->fopen($rawPath, 'wb');
 
 				if (is_resource($encHandle)) {
-					// Move plain file to a temporary location
-					$size = stream_copy_to_stream($plainHandle, $encHandle);
 
+					// write data to stream
+					fwrite($encHandle, $decrypted);
+
+					// close stream
 					fclose($encHandle);
-					fclose($plainHandle);
-
-					$fakeRoot = $this->view->getRoot();
-					$this->view->chroot('/' . $this->userId . '/files');
-
-					$this->view->rename($relPath . '.part', $relPath);
-
-					// set timestamp
-					$this->view->touch($relPath, $timestamp);
-
-					$encSize = $this->view->filesize($relPath);
-
-					$this->view->chroot($fakeRoot);
-
-					// Add the file to the cache
-					\OC\Files\Filesystem::putFileInfo($relPath, array(
-						'encrypted' => true,
-						'size' => $encSize,
-						'unencrypted_size' => $size,
-						'etag' => $fileInfo['etag']
-					));
-
-					$encryptedFiles[] = $relPath;
+				} else {
+					\OCP\Util::writeLog('files_encryption', 'initial encryption: could not encrypt legacy file ' . $rawPath, \OCP\Util::FATAL);
+					$result = false;
 				}
+
+				// disable proxy to prevent file being encrypted twice
+				\OC_FileProxy::$enabled = false;
 			}
-
-			// Encrypt legacy encrypted files
-			if (
-				!empty($legacyPassphrase)
-				&& !empty($newPassphrase)
-			) {
-
-				foreach ($found['legacy'] as $legacyFile) {
-
-					// Fetch data from file
-					$legacyData = $this->view->file_get_contents($legacyFile['path']);
-
-					// decrypt data, generate catfile
-					$decrypted = Crypt::legacyBlockDecrypt($legacyData, $legacyPassphrase);
-
-					$rawPath = $legacyFile['path'];
-
-					// enable proxy the ensure encryption is handled
-					\OC_FileProxy::$enabled = true;
-
-					// Open enc file handle for binary writing, with same filename as original plain file
-					$encHandle = $this->view->fopen( $rawPath, 'wb' );
-
-					if (is_resource($encHandle)) {
-
-						// write data to stream
-						fwrite($encHandle, $decrypted);
-
-						// close stream
-						fclose($encHandle);
-					}
-
-					// disable proxy to prevent file being encrypted twice
-					\OC_FileProxy::$enabled = false;
-				}
-			}
-
-			\OC_FileProxy::$enabled = true;
-
-			if ($versionStatus) {
-				\OC_App::enable('files_versions');
-			}
-
-			$this->encryptVersions($encryptedFiles);
-
-			// If files were found, return true
-			return true;
-		} else {
-
-			// If no files were found, return false
-			return false;
 		}
+
+		\OC_FileProxy::$enabled = true;
+
+		if ($versionStatus) {
+			\OC_App::enable('files_versions');
+		}
+
+		$result = $result && $this->encryptVersions($encryptedFiles);
+
+		return $result;
+
 	}
 
 	/**
diff --git a/apps/files_encryption/tests/helper.php b/apps/files_encryption/tests/helper.php
index 4b46e976b8..582d8149a8 100644
--- a/apps/files_encryption/tests/helper.php
+++ b/apps/files_encryption/tests/helper.php
@@ -18,15 +18,20 @@ use OCA\Encryption;
 class Test_Encryption_Helper extends \PHPUnit_Framework_TestCase {
 
 	const TEST_ENCRYPTION_HELPER_USER1 = "test-helper-user1";
+	const TEST_ENCRYPTION_HELPER_USER2 = "test-helper-user2";
 
 	public static function setUpBeforeClass() {
 		// create test user
+		\Test_Encryption_Util::loginHelper(\Test_Encryption_Helper::TEST_ENCRYPTION_HELPER_USER2, true);
 		\Test_Encryption_Util::loginHelper(\Test_Encryption_Helper::TEST_ENCRYPTION_HELPER_USER1, true);
 	}
 
 	public static function tearDownAfterClass() {
 		// cleanup test user
 		\OC_User::deleteUser(\Test_Encryption_Helper::TEST_ENCRYPTION_HELPER_USER1);
+		\OC_User::deleteUser(\Test_Encryption_Helper::TEST_ENCRYPTION_HELPER_USER2);
+		\OC_Hook::clear();
+		\OC_FileProxy::clearProxies();
 	}
 
 	/**
@@ -81,9 +86,11 @@ class Test_Encryption_Helper extends \PHPUnit_Framework_TestCase {
 
 		$path1 = "/" . self::TEST_ENCRYPTION_HELPER_USER1 . "/files/foo/bar.txt";
 		$path2 = "/" . self::TEST_ENCRYPTION_HELPER_USER1 . "/cache/foo/bar.txt";
-		$path3 = "/" . self::TEST_ENCRYPTION_HELPER_USER1 . "/thumbnails/foo";
+		$path3 = "/" . self::TEST_ENCRYPTION_HELPER_USER2 . "/thumbnails/foo";
 		$path4 ="/" . "/" . self::TEST_ENCRYPTION_HELPER_USER1;
 
+		\Test_Encryption_Util::loginHelper(self::TEST_ENCRYPTION_HELPER_USER1);
+
 		// if we are logged-in every path should return the currently logged-in user
 		$this->assertEquals(self::TEST_ENCRYPTION_HELPER_USER1, Encryption\Helper::getUser($path3));
 
diff --git a/apps/files_encryption/tests/util.php b/apps/files_encryption/tests/util.php
index a4dcc5cc8b..2b873bb308 100755
--- a/apps/files_encryption/tests/util.php
+++ b/apps/files_encryption/tests/util.php
@@ -306,18 +306,6 @@ class Test_Encryption_Util extends \PHPUnit_Framework_TestCase {
 		$this->view->unlink($this->userId . '/files/' . $filename);
 	}
 
-	/**
-	 * @medium
-	 */
-	function testIsSharedPath() {
-		$sharedPath = '/user1/files/Shared/test';
-		$path = '/user1/files/test';
-
-		$this->assertTrue($this->util->isSharedPath($sharedPath));
-
-		$this->assertFalse($this->util->isSharedPath($path));
-	}
-
 	function testEncryptAll() {
 
 		$filename = "/encryptAll" . uniqid() . ".txt";