Could you try upgrading to the newer 4.8.0-17.19 kernel that was
promoted to the release pocket last night:

https://launchpad.net/ubuntu/+source/linux/4.8.0-17.19

Alternatively, you could retest with the latest image here that now
contains this newer kernel as well:

http://cdimage.ubuntu.com/ubuntu-server/daily/20160927/

Please do let us know your results.

** Changed in: linux (Ubuntu)
   Importance: Undecided => Critical

** Changed in: linux (Ubuntu)
       Status: New => Triaged

** Changed in: linux (Ubuntu)
     Assignee: Taco Screen team (taco-screen-team) => Canonical Kernel Team 
(canonical-kernel-team)

** Tags added: kernel-4.8

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https://bugs.launchpad.net/bugs/1627984

Title:
  [Ubuntu16.10]KV4.8: OOPs while updating initramfs

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