OK, sounds like you're in unchartered territory then. Try adding
"init=/bin/sh" to the grub command line and booting, then:

1) See what "ulimit -n" shows.

  If it is < 1024, that might be your problem so try setting 'nofile' manually 
to atleast 1024 and then manually exec-ing upstart:
  
  ulimit -n 1024
  exec /sbin/init --debug </dev/console >/dev/console 2>&1

2) If (1) doesn't appear to be the problem check your root disk is
mounted as expected. Is it mounted read-write? Does the following help:

  mount -oremount,rw   /
  exec /sbin/init --debug </dev/console >/dev/console 2>&1

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https://bugs.launchpad.net/bugs/936293

Title:
  upstart 1.4-0ubuntu7 causes systems with custom kernel not to boot

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