Index: subversion/libsvn_wc/upgrade.c
===================================================================
--- subversion/libsvn_wc/upgrade.c	(revision 1604170)
+++ subversion/libsvn_wc/upgrade.c	(working copy)
@@ -430,21 +430,24 @@
 
 /* Wipe out all the obsolete files/dirs from the administrative area.  */
 static void
-wipe_obsolete_files(const char *wcroot_abspath, apr_pool_t *scratch_pool)
+wipe_obsolete_files(const char *wcroot_abspath, svn_boolean_t remove_format_entries, apr_pool_t *scratch_pool)
 {
   /* Zap unused files.  */
+  if (remove_format_entries)
+  {
+    svn_error_clear(svn_io_remove_file2(
+                      svn_wc__adm_child(wcroot_abspath,
+                                        SVN_WC__ADM_FORMAT,
+                                        scratch_pool),
+                      TRUE, scratch_pool));
+    svn_error_clear(svn_io_remove_file2(
+                      svn_wc__adm_child(wcroot_abspath,
+                                        SVN_WC__ADM_ENTRIES,
+                                        scratch_pool),
+                      TRUE, scratch_pool));
+  }
   svn_error_clear(svn_io_remove_file2(
                     svn_wc__adm_child(wcroot_abspath,
-                                      SVN_WC__ADM_FORMAT,
-                                      scratch_pool),
-                    TRUE, scratch_pool));
-  svn_error_clear(svn_io_remove_file2(
-                    svn_wc__adm_child(wcroot_abspath,
-                                      SVN_WC__ADM_ENTRIES,
-                                      scratch_pool),
-                    TRUE, scratch_pool));
-  svn_error_clear(svn_io_remove_file2(
-                    svn_wc__adm_child(wcroot_abspath,
                                       ADM_EMPTY_FILE,
                                       scratch_pool),
                     TRUE, scratch_pool));
@@ -564,7 +567,7 @@
                                                          iterpool),
                                        TRUE, NULL, NULL, iterpool));
   else
-    wipe_obsolete_files(dir_abspath, scratch_pool);
+    wipe_obsolete_files(dir_abspath, TRUE, scratch_pool);
 
   if (delete_dir)
     {
@@ -1977,7 +1980,7 @@
 #endif
 
   /* Zap anything that might be remaining or escaped our notice.  */
-  wipe_obsolete_files(wcroot_abspath, scratch_pool);
+  wipe_obsolete_files(wcroot_abspath, FALSE, scratch_pool);
 
   return SVN_NO_ERROR;
 }
Index: subversion/tests/cmdline/upgrade_tests.py
===================================================================
--- subversion/tests/cmdline/upgrade_tests.py	(revision 1604170)
+++ subversion/tests/cmdline/upgrade_tests.py	(working copy)
@@ -1438,6 +1438,39 @@
   # svn: warning: W200033: sqlite[S5]: database is locked
   svntest.actions.run_and_verify_svn(None, None, [], 'upgrade', sbox.wc_dir)
 
+@Issue(4395)
+def upgrade_dropped_status_entries_files(sbox):  
+  "upgrade dropped entries and status files"
+  
+  # We try to test several SVN versions with and without the 1.7.x 
+  # wc db structure.
+  files_to_test = (
+    ('wc-3x-1.4.6.tar.bz2', 'wc-1.4.6'),
+    ('upgrade_1_5.tar.bz2', None),
+    ('wc-3x-1.6.12.tar.bz2', 'wc-1.6.12'),
+    ('upgrade_from_1_7_wc.tar.bz2', None),
+  )
+  
+  for packedwc, wcdir in files_to_test:
+    replace_sbox_with_tarfile(sbox, packedwc, dir = wcdir)
+    
+    svntest.actions.run_and_verify_svn(None, None, [], 'upgrade', sbox.wc_dir)
+    
+    entrypath = os.path.join(sbox.wc_dir, ".svn/entries")
+    formatpath = os.path.join(sbox.wc_dir, ".svn/entries")
+    
+    for filepath in (entrypath, formatpath):
+      if not os.path.isfile(filepath):
+        raise svntest.Failure("Upgrade of %s: File %s is missing" %
+                    (packedwc, filepath))
+        
+      if int(open(filepath).read().rstrip()) != 12:
+        raise svntest.Failure("Upgrade of %s: File %s doesn't denote format 12" %
+                    (packedwc, filepath))
+    
+  
+  
+  
 ########################################################################
 # Run the tests
 
@@ -1494,6 +1527,7 @@
               iprops_upgrade1_6,
               changelist_upgrade_1_6,
               upgrade_1_7_dir_external,
+              upgrade_dropped_status_entries_files,
              ]