diff --git a/commands/command_checkout.go b/commands/command_checkout.go
index 0a05795a..389570c7 100644
--- a/commands/command_checkout.go
+++ b/commands/command_checkout.go
@@ -68,6 +68,7 @@ func checkoutFromFetchChan(include []string, exclude []string, in chan *lfs.Wrap
 
 	// Launch git update-index
 	c := make(chan *lfs.WrappedPointer)
+
 	var wait sync.WaitGroup
 	wait.Add(1)
 
@@ -142,7 +143,19 @@ func checkoutAll() {
 // Populate the working copy with the real content of objects where the file is
 // either missing, or contains a matching pointer placeholder, from a list of pointers.
 // If the file exists but has other content it is left alone
+// Callers of this function MUST NOT Panic or otherwise exit the process
+// without waiting for this function to shut down.  If the process exits while
+// update-index is in the middle of processing a file the git index can be left
+// in a locked state.
 func checkoutWithChan(in <-chan *lfs.WrappedPointer) {
+	// Get a converter from repo-relative to cwd-relative
+	// Since writing data & calling git update-index must be relative to cwd
+	repopathchan := make(chan string, 1)
+	cwdpathchan, err := lfs.ConvertRepoFilesRelativeToCwd(repopathchan)
+	if err != nil {
+		Panic(err, "Could not convert file paths")
+	}
+
 	// Fire up the update-index command
 	cmd := exec.Command("git", "update-index", "-q", "--refresh", "--stdin")
 	updateIdxStdin, err := cmd.StdinPipe()
@@ -154,13 +167,10 @@ func checkoutWithChan(in <-chan *lfs.WrappedPointer) {
 		Panic(err, "Could not update the index")
 	}
 
-	// Get a converter from repo-relative to cwd-relative
-	// Since writing data & calling git update-index must be relative to cwd
-	repopathchan := make(chan string, 1)
-	cwdpathchan, err := lfs.ConvertRepoFilesRelativeToCwd(repopathchan)
-	if err != nil {
-		Panic(err, "Could not convert file paths")
-	}
+	// From this point on, git update-index is running. Code in this loop MUST
+	// NOT Panic() or otherwise cause the process to exit. If the process exits
+	// while update-index is in the middle of updating, the index can remain in a
+	// locked state.
 
 	// As files come in, write them to the wd and update the index
 	for pointer := range in {
@@ -172,24 +182,27 @@ func checkoutWithChan(in <-chan *lfs.WrappedPointer) {
 				// File has non-pointer content, leave it alone
 				continue
 			}
-			Panic(err, "Problem accessing %v", pointer.Name)
+			LoggedError(err, "Problem accessing %v", pointer.Name)
+			continue
 		}
+
 		if filepointer != nil && filepointer.Oid != pointer.Oid {
 			// User has probably manually reset a file to another commit
 			// while leaving it a pointer; don't mess with this
 			continue
 		}
-		// OK now we can (over)write the file content
+
 		repopathchan <- pointer.Name
 		cwdfilepath := <-cwdpathchan
-		// smudge but set auto-download to false
+
 		err = lfs.PointerSmudgeToFile(cwdfilepath, pointer.Pointer, false, nil)
 		if err != nil {
 			if err == lfs.DownloadDeclinedError {
 				// acceptable error, data not local (fetch not run or include/exclude)
 				LoggedError(err, "Skipped checkout for %v, content not local. Use fetch to download.", pointer.Name)
 			} else {
-				Panic(err, "Could not checkout file")
+				LoggedError(err, "Could not checkout file")
+				continue
 			}
 		}
 
@@ -201,5 +214,4 @@ func checkoutWithChan(in <-chan *lfs.WrappedPointer) {
 	if err := cmd.Wait(); err != nil {
 		Panic(err, "Error updating the git index")
 	}
-
 }