           element.innerText
 
         expect(lambdaEntries).toEqual(["iota", "kappa"])
+
+      describe "when a directory is reloaded", ->
+        it "squashes the directory names the last of which is same as an unsquashed directory", ->
+          muDir = $(treeView.roots[0].entries).find('.directory:contains(mu):first')
+          muDir[0].expand()
+          muDir[0].reload()
+          muEntries = [].slice.call(muDir[0].children[1].children).map (element) ->
+            element.innerText
+
+          expect(muEntries).toEqual(["nu#{path.sep}xi", "xi"])
 
   describe "Git status decorations", ->
     [projectPath, modifiedFile, originalFileContent] = []

      fs.makeTreeSync(lambdaDirPath)
      fs.makeTreeSync(iotaDirPath)
      fs.makeTreeSync(kappaDirPath)

      atom.project.setPaths([rootDirPath])


      iotaDirPath = path.join(lambdaDirPath, "iota")
      kappaDirPath = path.join(lambdaDirPath, "kappa")

      muDirPath = path.join(rootDirPath, "mu")
      nuDirPath = path.join(muDirPath, "nu")
      xiDirPath1 = path.join(muDirPath, "xi")
      xiDirPath2 = path.join(nuDirPath, "xi")

      fs.makeTreeSync(zetaDirPath)
      fs.writeFileSync(zetaFilePath, "doesn't matter")

