diff --git a/main/src/main/scala/sbt/internals/parser/SbtParser.scala b/main/src/main/scala/sbt/internals/parser/SbtParser.scala
index 59f0d9ac4..30a754eb2 100644
--- a/main/src/main/scala/sbt/internals/parser/SbtParser.scala
+++ b/main/src/main/scala/sbt/internals/parser/SbtParser.scala
@@ -23,10 +23,13 @@ private[sbt] object SbtParser {
 sealed trait ParsedSbtFileExpressions {
   /** The set of parsed import expressions. */
   def imports: Seq[(String, Int)]
+
   /** The set of parsed defintions and/or sbt build settings. */
   def settings: Seq[(String, LineRange)]
+
   /** The set of scala tree's for parsed definitions/settings and the underlying string representation.. */
   def settingsTrees: Seq[(String, Tree)]
+
   /** Represents the changes we had to perform to the sbt file so that XML will parse correctly. */
   def modifiedContent: String
 }
@@ -229,13 +232,17 @@ private[sbt] object XmlContent {
       (accSeqIndex, el) =>
         val (statement, startIndex, endIndex) = el
         val (accSeq, index) = accSeqIndex
-        val textStatementOption = if (index >= startIndex) {
-          None
+        val (st, textStatementOption) = if (index >= startIndex) {
+          (statement, None)
         } else {
           val s = content.substring(index, startIndex)
-          Some((s, false))
+          if (s.trim.isEmpty) {
+            (statement + s, None)
+          } else {
+            (statement, Some((s, false)))
+          }
         }
-        val newAccSeq = (statement, true) +: addOptionToCollection(accSeq, textStatementOption)
+        val newAccSeq = (st, true) +: addOptionToCollection(accSeq, textStatementOption)
         (newAccSeq, endIndex)
     }
     val endOfFile = content.substring(index, content.length)
@@ -352,18 +359,22 @@ private[sbt] object XmlContent {
    * @return content with xml with brackets
    */
   private def addExplicitXmlContent(content: String, xmlParts: Seq[(String, Int, Int)]): String = {
-    val statements: Seq[(String, Boolean)] = splitFile(content, xmlParts)
-    val (correctedStmt, shouldAddCloseBrackets, wasXml, _) = addBracketsIfNecessary(statements)
+    val statementsXml = splitFile(content, xmlParts)
+    val (correctedStmt, shouldAddCloseBrackets, wasXml, _) = addBracketsIfNecessary(statementsXml)
     val closeIfNecessaryCorrectedStmt =
       if (shouldAddCloseBrackets && wasXml) {
-        correctedStmt.head +: CLOSE_BRACKET +: correctedStmt.tail
+        if (correctedStmt.head.trim.isEmpty) {
+          CLOSE_BRACKET +: correctedStmt
+        } else {
+          correctedStmt.head +: CLOSE_BRACKET +: correctedStmt.tail
+        }
       } else {
         correctedStmt
       }
     closeIfNecessaryCorrectedStmt.reverse.mkString
   }
 
-  def addBracketsIfNecessary(statements: Seq[(String, Boolean)]): (Seq[String], Boolean, Boolean, String) = {
+  private def addBracketsIfNecessary(statements: Seq[(String, Boolean)]): (Seq[String], Boolean, Boolean, String) = {
     statements.foldLeft((Seq.empty[String], false, false, "")) {
       case ((accStmt, shouldAddCloseBracket, prvWasXml, prvStmt), (stmt, isXml)) =>
         if (stmt.trim.isEmpty) {
diff --git a/main/src/test/resources/fail-format/.gitignore b/main/src/test/resources/fail-format/.gitignore
new file mode 100644
index 000000000..f59ec20aa
--- /dev/null
+++ b/main/src/test/resources/fail-format/.gitignore
@@ -0,0 +1 @@
+*
\ No newline at end of file
diff --git a/main/src/test/resources/old-format/21.sbt.txt b/main/src/test/resources/old-format/21.sbt.txt
new file mode 100644
index 000000000..c4cfc8585
--- /dev/null
+++ b/main/src/test/resources/old-format/21.sbt.txt
@@ -0,0 +1,72 @@
+
+name := "scala-stm"
+
+organization := "org.scala-stm"
+
+version := "0.8-SNAPSHOT"
+
+scalaVersion := "2.11.2"
+
+crossScalaVersions := Seq("2.11.2", "2.10.4", "2.9.3")
+
+libraryDependencies += ("org.scalatest" %% "scalatest" % "[1.5,)" % "test")
+
+libraryDependencies += ("junit" % "junit" % "4.5" % "test")
+
+// skip exhaustive tests
+testOptions += Tests.Argument("-l", "slow")
+
+// test of TxnExecutor.transformDefault must be run by itself
+parallelExecution in Test := false
+
+////////////////////
+// publishing
+
+pomExtra :=
+  <url>http://nbronson.github.com/scala-stm/</url>
+  <licenses>
+    <license>
+      <name>BSD</name>
+      <url>https://github.com/nbronson/scala-stm/blob/master/LICENSE.txt</url>
+      <distribution>repo</distribution>
+    </license>
+  </licenses>
+  <scm>
+    <connection>scm:git:git@github.com:nbronson/scala-stm.git</connection>
+    <url>git@github.com:nbronson/scala-stm.git</url>
+  </scm>
+  <developers>
+    <developer>
+      <id>nbronson</id>
+      <name>Nathan Bronson</name>
+      <email>ngbronson@gmail.com</email>
+    </developer>
+  </developers>
+
+publishMavenStyle := true
+
+publishTo <<= (version) { v: String =>
+    val base = "https://oss.sonatype.org/"
+    if (v.trim.endsWith("SNAPSHOT"))
+      Some("snapshots" at base + "content/repositories/snapshots/")
+    else
+      Some("releases" at base + "service/local/staging/deploy/maven2/")
+  }
+
+// exclude scalatest from the Maven POM
+pomPostProcess := { xi: scala.xml.Node =>
+    import scala.xml._
+    val badDeps = (xi \\ "dependency") filter {
+      x => (x \ "artifactId").text != "scala-library"
+    } toSet
+    def filt(root: Node): Node = root match {
+      case x: Elem => {
+        val ch = x.child filter { !badDeps(_) } map { filt(_) }
+        Elem(x.prefix, x.label, x.attributes, x.scope, ch: _*)
+      }
+      case x => x
+    }
+    filt(xi)
+  }
+
+credentials += Credentials(Path.userHome / ".ivy2" / ".credentials")