diff --git a/pkgutil.cc b/pkgutil.cc
index bf1a0aa..3465402 100644
--- a/pkgutil.cc
+++ b/pkgutil.cc
@@ -391,6 +438,7 @@ void pkgutil::pkg_install(const string& filename, const set<string>& keep_list,
 	unsigned int i;
 	char buf[PATH_MAX];
 	string absroot;
+	set<string> reject_dir_list;
 
 	archive = archive_read_new();
 	INIT_ARCHIVE(archive);
@@ -403,6 +451,10 @@ void pkgutil::pkg_install(const string& filename, const set<string>& keep_list,
 	chdir(root.c_str());
 	absroot = getcwd(buf, sizeof(buf));
 
+#ifndef NDEBUG
+	cerr << utilname << ": Installing files:" << endl;
+#endif
+
 	for (i = 0; archive_read_next_header(archive, &entry) ==
 	     ARCHIVE_OK; ++i) {
 		string archive_filename = archive_entry_pathname(entry);
@@ -445,6 +497,10 @@ void pkgutil::pkg_install(const string& filename, const set<string>& keep_list,
 			continue;
 		}
 
+#ifndef NDEBUG
+		cout << archive_filename << endl;
+#endif
+
 		// Check rejected file
 		if (real_filename != original_filename) {
 			bool remove_file = false;
@@ -461,8 +517,29 @@ void pkgutil::pkg_install(const string& filename, const set<string>& keep_list,
 			// Remove rejected file or signal about its existence
 			if (remove_file)
 				file_remove(reject_dir, real_filename);
-			else
+			else {
 				cout << utilname << ": rejecting " << archive_filename << ", keeping existing version" << endl;
+
+				if (0 != archive_filename.length()
+						&& '/' != archive_filename[archive_filename.length() - 1]
+						&& '/' != archive_filename[0]) {
+					string::size_type delim_pos = archive_filename.find_last_of('/');
+					string cur_file = archive_filename;
+					while (string::npos != delim_pos) {
+						cur_file = cur_file.substr(0, 1 + delim_pos);
+#ifndef NDEBUG
+						cout << "processing directory " << cur_file << endl;
+#endif
+						if (reject_dir_list.end() == reject_dir_list.find(cur_file)) {
+#ifndef NDEBUG
+							cout << "found new rejected directory " << cur_file << endl;
+#endif
+							reject_dir_list.insert(reject_dir_list.end(), cur_file);
+						}
+						delim_pos = cur_file.find_last_of('/', delim_pos - 1);
+					}
+				}
+			}
 		}
 	}
 
@@ -474,6 +551,55 @@ void pkgutil::pkg_install(const string& filename, const set<string>& keep_list,
 	}
 
 	archive_read_free(archive);
+
+	if (0 != reject_dir_list.size()) {
+#ifndef NDEBUG
+		cerr << endl;
+		cerr << "Rejected directory list:" << endl;
+		copy(reject_dir_list.begin(), reject_dir_list.end(), ostream_iterator<string>(cerr, "\n"));
+		cerr << endl;
+#endif
+		archive = archive_read_new();
+		INIT_ARCHIVE(archive);
+
+		if (archive_read_open_filename(archive,
+		    filename.c_str(),
+		    DEFAULT_BYTES_PER_BLOCK) != ARCHIVE_OK)
+			throw runtime_error_with_errno("could not open " + filename, archive_errno(archive));
+
+		for (i = 0; archive_read_next_header(archive, &entry) ==
+		     ARCHIVE_OK; ++i) {
+			string archive_filename = archive_entry_pathname(entry);
+
+			if (reject_dir_list.end() == reject_dir_list.find(archive_filename))
+				continue;
+#ifndef NDEBUG
+			cout << "extracting permissions for rejected directory " << archive_filename << endl;
+#endif
+
+			string reject_dir = trim_filename(absroot + string("/") + string(PKG_REJECTED));
+			string reject_filename = trim_filename(reject_dir + string("/") + archive_filename);
+
+			archive_entry_set_pathname(entry, const_cast<char*>
+						   (reject_filename.c_str()));
+
+			// Extract file
+			unsigned int flags = ARCHIVE_EXTRACT_OWNER | ARCHIVE_EXTRACT_PERM | ARCHIVE_EXTRACT_TIME | ARCHIVE_EXTRACT_UNLINK;
+
+			if (archive_read_extract(archive, entry, flags) != ARCHIVE_OK) {
+				// If a file fails to install we just print an error message and
+				// continue trying to install the rest of the package,
+				// unless this is not an upgrade.
+				const char* msg = archive_error_string(archive);
+				cerr << utilname << ": could not install rejected " + archive_filename << ": " << msg << endl;
+				if (!upgrade)
+					throw runtime_error("extract error: " + archive_filename + ": " + msg);
+				continue;
+			}
+		}
+
+		archive_read_free(archive);
+	}
 }
 
 void pkgutil::ldconfig() const