OK, i recreated with simple:
 uvt-kvm create sm-y1 release=yakkety
 uvt-kvm ssh --insecure sm-y1
 % echo "root:passw0rd" | sudo chpasswd
 % sudo apt-get update && sudo apt-get dist-upgrade && sudo reboot

then at the virsh console i see the fail, log in and:

root@sm-y1:~# mount /dev/disk/by-label/UEFI /mnt
[  224.272443] FAT-fs (vda15): codepage cp437 not found
mount: wrong fs type, bad option, bad superblock on /dev/vda15,
       missing codepage or helper program, or other error

       In some cases useful info is found in syslog - try
       dmesg | tail or so.
root@sm-y1:~# dmesg | tail
[    4.468785] call_modprobe: nls_utf8   2
[    4.473050] ISO 9660 Extensions: RRIP_1991A
[    4.501051] audit: type=1400 audit(1474476002.188:6): apparmor="STATUS" 
operation="profile_load" profile="unconfined" name="/sbin/dhclient" pid=543 
[    4.501270] audit: type=1400 audit(1474476002.188:7): apparmor="STATUS" 
operation="profile_load" profile="unconfined" 
name="/usr/lib/NetworkManager/nm-dhcp-client.action" pid=543 
[    4.501471] audit: type=1400 audit(1474476002.188:8): apparmor="STATUS" 
operation="profile_load" profile="unconfined" 
name="/usr/lib/NetworkManager/nm-dhcp-helper" pid=543 comm="apparmor_parser"
[    4.501656] audit: type=1400 audit(1474476002.188:9): apparmor="STATUS" 
operation="profile_load" profile="unconfined" 
name="/usr/lib/connman/scripts/dhclient-script" pid=543 comm="apparmor_parser"
[    4.514047] audit: type=1400 audit(1474476002.200:10): apparmor="STATUS" 
operation="profile_load" profile="unconfined" name="/usr/bin/lxc-start" pid=566 
[  224.270568] FAT-fs (vda15): utf8 is not a recommended IO charset for FAT 
filesystems, filesystem will be case sensitive!
[  224.271666] call_modprobe: nls_cp437   2
[  224.272443] FAT-fs (vda15): codepage cp437 not found
root@sm-y1:~# find /lib/modules/ -name "*cp437*"
root@sm-y1:~# ls /lib/modules/
4.4.0-9136-generic  4.8.0-11-generic
root@sm-y1:~# find /lib/modules -name "nls_*"

** Also affects: linux (Ubuntu)
   Importance: Undecided
       Status: New

** Changed in: linux (Ubuntu)
       Status: New => Confirmed

** Changed in: linux (Ubuntu)
   Importance: Undecided => Critical

** Changed in: cloud-images
       Status: New => Confirmed

** Changed in: cloud-images
   Importance: Undecided => Critical

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  image won't boot after upgrading to yakkety's 4.8 kernel because efi

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