diff --git a/hv-rhel5.x/hv/tools/hv_kvp_daemon.c b/hv-rhel5.x/hv/tools/hv_kvp_daemon.c
index 83d8ede47..313305d31 100644
--- a/hv-rhel5.x/hv/tools/hv_kvp_daemon.c
+++ b/hv-rhel5.x/hv/tools/hv_kvp_daemon.c
@@ -194,11 +194,14 @@ static void kvp_update_mem_state(int pool)
 	for (;;) {
 		readp = &record[records_read];
 		records_read += fread(readp, sizeof(struct kvp_record),
-					ENTRIES_PER_BLOCK * num_blocks,
-					filep);
+				ENTRIES_PER_BLOCK * num_blocks - records_read,
+				filep);
 
 		if (ferror(filep)) {
-			syslog(LOG_ERR, "Failed to read file, pool: %d", pool);
+			syslog(LOG_ERR,
+				"Failed to read file, pool: %d; error: %d %s",
+				 pool, errno, strerror(errno));
+			kvp_release_lock(pool);
 			exit(EXIT_FAILURE);
 		}
 
@@ -211,6 +214,7 @@ static void kvp_update_mem_state(int pool)
 
 			if (record == NULL) {
 				syslog(LOG_ERR, "malloc failed");
+				kvp_release_lock(pool);
 				exit(EXIT_FAILURE);
 			}
 			continue;
@@ -225,15 +229,11 @@ static void kvp_update_mem_state(int pool)
 	fclose(filep);
 	kvp_release_lock(pool);
 }
+
 static int kvp_file_init(void)
 {
 	int  fd;
-	FILE *filep;
-	size_t records_read;
 	char *fname;
-	struct kvp_record *record;
-	struct kvp_record *readp;
-	int num_blocks;
 	int i;
 	int alloc_unit = sizeof(struct kvp_record) * ENTRIES_PER_BLOCK;
 
@@ -247,61 +247,19 @@ static int kvp_file_init(void)
 
 	for (i = 0; i < KVP_POOL_COUNT; i++) {
 		fname = kvp_file_info[i].fname;
-		records_read = 0;
-		num_blocks = 1;
 		sprintf(fname, "%s/.kvp_pool_%d", KVP_CONFIG_LOC, i);
 		fd = open(fname, O_RDWR | O_CREAT | O_CLOEXEC, 0644 /* rw-r--r-- */);
 
 		if (fd == -1)
 			return 1;
 
-
-		filep = fopen(fname, "re");
-		if (!filep) {
-			close(fd);
-			return 1;
-		}
-
-		record = malloc(alloc_unit * num_blocks);
-		if (record == NULL) {
-			fclose(filep);
-			close(fd);
-			return 1;
-		}
-		for (;;) {
-			readp = &record[records_read];
-			records_read += fread(readp, sizeof(struct kvp_record),
-					ENTRIES_PER_BLOCK,
-					filep);
-
-			if (ferror(filep)) {
-				syslog(LOG_ERR, "Failed to read file, pool: %d",
-				       i);
-				exit(EXIT_FAILURE);
-			}
-
-			if (!feof(filep)) {
-				/*
-				 * We have more data to read.
-				 */
-				num_blocks++;
-				record = realloc(record, alloc_unit *
-						num_blocks);
-				if (record == NULL) {
-					fclose(filep);
-					close(fd);
-					return 1;
-				}
-				continue;
-			}
-			break;
-		}
 		kvp_file_info[i].fd = fd;
-		kvp_file_info[i].num_blocks = num_blocks;
-		kvp_file_info[i].records = record;
-		kvp_file_info[i].num_records = records_read;
-		fclose(filep);
-
+		kvp_file_info[i].num_blocks = 1;
+		kvp_file_info[i].records = malloc(alloc_unit);
+		if (kvp_file_info[i].records == NULL)
+			return 1;
+		kvp_file_info[i].num_records = 0;
+		kvp_update_mem_state(i);
 	}
 
 	return 0;