Like 1st post, exactly the same for me with new kernel 4.4.0-42.62
Hardware: Dell E5410/4GB i5/512Gb SSD, 16.04.1 LTS 64b full root
Drop to initramfs without prompting to enter luks password.
Boot back with previous 4.4.0-38.57 is fine, no solution with update-initramfs
Can I test something ?
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4.4.0-40-generic no prompts for disk encryption + loops on dots load
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