+1 to hill!!

This worked for me (note that I had a 7th step to update initramfs just
in case):

1. boot your droplet with a Recovery ISO - Like TigerShark from DigitalOcean
2. Network must be configured, either manually or via TigerShark script.
3. $ mount -rw -o remount /dev/vda1 /mnt
4. $ chroot /mnt
5. $ unlink /etc/resolv.conf && echo "nameserver 8.8.8.8" > /etc/resolv.conf
6. $ apt-get install init
7. $ update-initramfs -u

After reboot your system. It will work fine. Enjoy! ;)

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https://bugs.launchpad.net/bugs/1652462

Title:
  No init after do-release-upgrade from 14.04 to 16.04 (kernel panic)

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