Comment 4 for bug 1689642

Well... I tried to verify this using a -generic kernel, but it proved harder
than I thought. That is because the squashfs module is builtin in standard
ubuntu kernels.

So, to verify this i'd have to build my own kernel that had it as a module.

Below is what I've done to verify this at least doesn't regress anything.
And to also verify that the package has 'manual_add_modules squashfs'.

$ lxc launch ubuntu-daily:zesty z1
$ echo "deb http://archive.ubuntu.com/ubuntu zesty-proposed main universe" |
   lxc file push - z1/etc/apt/sources.list.d/proposed.list
$ lxc exec z1 -- apt-get update -q
$ lxc exec z1 -- apt-get install \
    --quiet --assume-yes --no-install-recommends \
    cloud-initramfs-rooturl linux-image-generic

$ lxc exec z1 -- sh -xc 'update-initramfs -u -k all'
+ update-initramfs -u -k all
update-initramfs: Generating /boot/initrd.img-4.10.0-26-generic
W: mdadm: /etc/mdadm/mdadm.conf defines no arrays.

$ lxc exec z1 -- grep squash /usr/share/initramfs-tools/hooks/rooturl
manual_add_modules squashfs