diff --git a/platform/platform-impl/src/com/intellij/openapi/vfs/newvfs/impl/VirtualDirectoryImpl.java b/platform/platform-impl/src/com/intellij/openapi/vfs/newvfs/impl/VirtualDirectoryImpl.java
index 3fd44e3ebef9..819d56f3f56c 100644
--- a/platform/platform-impl/src/com/intellij/openapi/vfs/newvfs/impl/VirtualDirectoryImpl.java
+++ b/platform/platform-impl/src/com/intellij/openapi/vfs/newvfs/impl/VirtualDirectoryImpl.java
@@ -299,13 +299,16 @@ public class VirtualDirectoryImpl extends VirtualFileSystemEntry {
       return Collections.emptyList();
     }
 
-    if (!ourPersistence.areChildrenLoaded(this)) {
-      final String[] names = ourPersistence.listPersisted(this);
-      final NewVirtualFileSystem delegate = PersistentFS.replaceWithNativeFS(getFileSystem());
-      for (String name : names) {
-        findChild(name, false, false, delegate);
-      }
+    if (ourPersistence.areChildrenLoaded(this)) {
+      return Arrays.asList(getChildren());
     }
+    
+    final String[] names = ourPersistence.listPersisted(this);
+    final NewVirtualFileSystem delegate = PersistentFS.replaceWithNativeFS(getFileSystem());
+    for (String name : names) {
+      findChild(name, false, false, delegate);
+    }
+    
     return getCachedChildren();
   }
 
diff --git a/platform/platform-tests/testSrc/com/intellij/openapi/vfs/newvfs/persistent/PersistentFsTest.java b/platform/platform-tests/testSrc/com/intellij/openapi/vfs/newvfs/persistent/PersistentFsTest.java
index 1d4b76e993a4..59568a5f7d35 100644
--- a/platform/platform-tests/testSrc/com/intellij/openapi/vfs/newvfs/persistent/PersistentFsTest.java
+++ b/platform/platform-tests/testSrc/com/intellij/openapi/vfs/newvfs/persistent/PersistentFsTest.java
@@ -187,6 +187,60 @@ public class PersistentFsTest extends PlatformTestCase {
     assertEquals(1, logCount[0]);
   }
 
+  public void testIterInDbChildrenWorksForRemovedDirsAfterRestart() throws IOException {
+    // test (re)creates <testName>/subDir/subSubDir/Foo.txt outside tested/watched project and checks removal events on subDir / subSubDir / Foo.txt
+    // test starts real testing ("after restart") after launching second time using same VFS
+    // hours spent writing this test: 4
+    VirtualFile projectStructure = createTestProjectStructure();
+    String testName = getTestName(false);
+
+    // wrt persistence subDir becomes partially loaded and subsubDir becomes fully loaded
+    File nestedDirOutsideTheProject = new File(projectStructure.getPath() + "../../../"+testName + "/subDir", "subSubDir");
+    Disposable disposable = null;
+    
+    try {
+      boolean atleastSecondRun = nestedDirOutsideTheProject.getParentFile().getParentFile().exists();
+      StringBuilder eventLog = new StringBuilder();
+      
+      if (atleastSecondRun) {
+        disposable = Disposer.newDisposable();
+        getProject().getMessageBus().connect(disposable).subscribe(VirtualFileManager.VFS_CHANGES, new BulkFileListener() {
+          @Override
+          public void before(@NotNull List<? extends VFileEvent> events) {
+            for(VFileEvent event:events) {
+              if (event instanceof VFileDeleteEvent) process(((VFileDeleteEvent)event).getFile());
+            }
+          }
+          private void process(VirtualFile file) {
+            String path = file.getPath();
+            eventLog.append(path.substring(path.indexOf(testName) + testName.length() + 1)).append("\n");
+            Iterable<VirtualFile> files = ((NewVirtualFile)file).iterInDbChildren();
+            for(VirtualFile nested:files) process(nested);
+          }
+        });
+      }
+      
+      // recreating structure will fire vfs removal events
+      VirtualFile nestedDirOutsideTheProjectFile = VfsUtil.createDirectories(nestedDirOutsideTheProject.getPath());
+      WriteAction.run(() -> nestedDirOutsideTheProjectFile.createChildData(null, "Foo.txt"));
+      
+      // subsubDir becomes fully loaded wrt persistence
+      nestedDirOutsideTheProjectFile.getChildren();
+
+      if (atleastSecondRun) {
+        assertEquals("subDir\n" + 
+                     "subDir/subSubDir\n" +
+                     "subDir/subSubDir/Foo.txt\n", 
+                     eventLog.toString()
+        );
+      }
+    } finally {
+      if (disposable != null) Disposer.dispose(disposable);
+      // remove <testName>/subDir via java.io to have vfs events on next test launch
+      FileUtil.delete(nestedDirOutsideTheProject.getParentFile());
+    }
+  }
+  
   public void testModCountIncreases() throws IOException {
     VirtualFile vFile = setupFile();
     ManagingFS managingFS = ManagingFS.getInstance();