diff --git a/ipam/allocator.go b/ipam/allocator.go
index 04ad0cd9..05fdcda1 100644
--- a/ipam/allocator.go
+++ b/ipam/allocator.go
@@ -55,19 +55,21 @@ type Allocator struct {
 	paxos            *paxos.Node
 	paxosTicker      *time.Ticker
 	shuttingDown     bool // to avoid doing any requests while trying to shut down
+	isKnownPeer      func(router.PeerName) bool
 	now              func() time.Time
 }
 
 // NewAllocator creates and initialises a new Allocator
-func NewAllocator(ourName router.PeerName, ourUID router.PeerUID, ourNickname string, universe address.Range, quorum uint) *Allocator {
+func NewAllocator(ourName router.PeerName, ourUID router.PeerUID, ourNickname string, universe address.Range, quorum uint, isKnownPeer func(name router.PeerName) bool) *Allocator {
 	return &Allocator{
-		ourName:   ourName,
-		universe:  universe,
-		ring:      ring.New(universe.Start, universe.End, ourName),
-		owned:     make(map[string][]address.Address),
-		paxos:     paxos.NewNode(ourName, ourUID, quorum),
-		nicknames: map[router.PeerName]string{ourName: ourNickname},
-		now:       time.Now,
+		ourName:     ourName,
+		universe:    universe,
+		ring:        ring.New(universe.Start, universe.End, ourName),
+		owned:       make(map[string][]address.Address),
+		paxos:       paxos.NewNode(ourName, ourUID, quorum),
+		nicknames:   map[router.PeerName]string{ourName: ourNickname},
+		isKnownPeer: isKnownPeer,
+		now:         time.Now,
 	}
 }
 
@@ -274,6 +276,33 @@ func (alloc *Allocator) Free(ident string, addrToFree address.Address) error {
 	return <-errChan
 }
 
+func (alloc *Allocator) pickPeerFromNicknames(isValid func(router.PeerName) bool) router.PeerName {
+	for name := range alloc.nicknames {
+		if name != alloc.ourName && isValid(name) {
+			return name
+		}
+	}
+	return router.UnknownPeerName
+}
+
+func (alloc *Allocator) pickPeerForTransfer() router.PeerName {
+	// first try alive peers that actively participate in IPAM (i.e. have entries)
+	if heir := alloc.ring.PickPeerForTransfer(alloc.isKnownPeer); heir != router.UnknownPeerName {
+		return heir
+	}
+	// next try alive peers that have IPAM enabled but have no entries
+	if heir := alloc.pickPeerFromNicknames(alloc.isKnownPeer); heir != router.UnknownPeerName {
+		return heir
+	}
+	// next try disappeared peers that still have entries
+	t := func(router.PeerName) bool { return true }
+	if heir := alloc.ring.PickPeerForTransfer(t); heir != router.UnknownPeerName {
+		return heir
+	}
+	// finally, disappeared peers that that passively participated in IPAM
+	return alloc.pickPeerFromNicknames(t)
+}
+
 // Shutdown (Sync)
 func (alloc *Allocator) Shutdown() {
 	alloc.infof("Shutdown")
@@ -282,7 +311,7 @@ func (alloc *Allocator) Shutdown() {
 		alloc.shuttingDown = true
 		alloc.cancelOps(&alloc.pendingClaims)
 		alloc.cancelOps(&alloc.pendingAllocates)
-		if heir := alloc.ring.PickPeerForTransfer(); heir != router.UnknownPeerName {
+		if heir := alloc.pickPeerForTransfer(); heir != router.UnknownPeerName {
 			alloc.ring.Transfer(alloc.ourName, heir)
 			alloc.space.Clear()
 			alloc.gossip.GossipBroadcast(alloc.Gossip())
@@ -310,7 +339,6 @@ func (alloc *Allocator) AdminTakeoverRanges(peerNameOrNickname string) error {
 			return
 		}
 
-		delete(alloc.nicknames, peername)
 		newRanges, err := alloc.ring.Transfer(peername, alloc.ourName)
 		alloc.space.AddRanges(newRanges)
 		resultChan <- err
@@ -332,11 +360,11 @@ func (alloc *Allocator) lookupPeername(name string) (router.PeerName, error) {
 	return router.PeerNameFromString(name)
 }
 
-// Restrict the peers in "nicknames" to those in the ring and our own
+// Restrict the peers in "nicknames" to those in the ring plus peers known to the router
 func (alloc *Allocator) pruneNicknames() {
 	ringPeers := alloc.ring.PeerNames()
 	for name := range alloc.nicknames {
-		if _, ok := ringPeers[name]; !ok && name != alloc.ourName {
+		if _, ok := ringPeers[name]; !ok && !alloc.isKnownPeer(name) {
 			delete(alloc.nicknames, name)
 		}
 	}
diff --git a/ipam/ring/ring.go b/ipam/ring/ring.go
index b82bad1d..fee7991e 100644
--- a/ipam/ring/ring.go
+++ b/ipam/ring/ring.go
@@ -470,9 +470,9 @@ func (r *Ring) ChoosePeersToAskForSpace(start, end address.Address) []router.Pee
 	return result
 }
 
-func (r *Ring) PickPeerForTransfer() router.PeerName {
+func (r *Ring) PickPeerForTransfer(isValid func(router.PeerName) bool) router.PeerName {
 	for _, entry := range r.Entries {
-		if entry.Peer != r.Peer {
+		if entry.Peer != r.Peer && isValid(entry.Peer) {
 			return entry.Peer
 		}
 	}
diff --git a/ipam/testutils_test.go b/ipam/testutils_test.go
index 95f6407a..144e313f 100644
--- a/ipam/testutils_test.go
+++ b/ipam/testutils_test.go
@@ -135,7 +135,7 @@ func makeAllocator(name string, cidrStr string, quorum uint) (*Allocator, addres
 	}
 
 	alloc := NewAllocator(peername, router.PeerUID(rand.Int63()),
-		"nick-"+name, cidr.Range(), quorum)
+		"nick-"+name, cidr.Range(), quorum, func(router.PeerName) bool { return true })
 
 	return alloc, cidr.HostRange()
 }
diff --git a/prog/weaver/main.go b/prog/weaver/main.go
index db0f7144..453584b3 100644
--- a/prog/weaver/main.go
+++ b/prog/weaver/main.go
@@ -375,7 +375,8 @@ func createAllocator(router *weave.Router, ipRangeStr string, defaultSubnetStr s
 			Log.Fatalf("IP address allocation default subnet %s does not overlap with allocation range %s", defaultSubnet, ipRange)
 		}
 	}
-	allocator := ipam.NewAllocator(router.Ourself.Peer.Name, router.Ourself.Peer.UID, router.Ourself.Peer.NickName, ipRange.Range(), quorum)
+	isKnownPeer := func(name weave.PeerName) bool { return router.Peers.Fetch(name) != nil }
+	allocator := ipam.NewAllocator(router.Ourself.Peer.Name, router.Ourself.Peer.UID, router.Ourself.Peer.NickName, ipRange.Range(), quorum, isKnownPeer)
 
 	allocator.SetInterfaces(router.NewGossip("IPallocation", allocator))
 	allocator.Start()
diff --git a/test/165_reset_2_test.sh b/test/165_reset_2_test.sh
new file mode 100755
index 00000000..05d68677
--- /dev/null
+++ b/test/165_reset_2_test.sh
@@ -0,0 +1,22 @@
+#! /bin/bash
+
+. ./config.sh
+
+start_suite "Rolling restart with reset"
+
+weave_on $HOST1 launch-router
+weave_on $HOST2 launch-router $HOST1
+
+start_container $HOST1 --name=c1
+start_container $HOST2 --name=c2
+
+# Now reset the routers so they should give their space away, and restart
+weave_on $HOST1 reset
+weave_on $HOST1 launch-router $HOST2
+weave_on $HOST2 reset
+weave_on $HOST2 launch-router $HOST1
+
+# And try to start a container
+assert_raises "timeout 10 cat <( start_container $HOST1 )"
+
+end_suite