diff --git a/app/assets/javascripts/repo/helpers/repo_helper.js b/app/assets/javascripts/repo/helpers/repo_helper.js
index 8b73a1020a0..9e53ffe9a6f 100644
--- a/app/assets/javascripts/repo/helpers/repo_helper.js
+++ b/app/assets/javascripts/repo/helpers/repo_helper.js
@@ -98,8 +98,8 @@ const RepoHelper = {
     .then((response) => {
       const data = response.data;
       if (response.headers && response.headers['page-title']) data.pageTitle = decodeURI(response.headers['page-title']);
-      if (response.headers && response.headers['is-root'] && !Store.isInitialRoot) {
-        Store.isRoot = convertPermissionToBoolean(response.headers['is-root']);
+      if (data.path && !Store.isInitialRoot) {
+        Store.isRoot = data.path === '/';
         Store.isInitialRoot = Store.isRoot;
       }
 
@@ -140,6 +140,10 @@ const RepoHelper = {
 
   addToDirectory(file, data) {
     const tree = file || Store;
+
+    // TODO: Figure out why `popstate` is being trigger in the specs
+    if (!tree.files) return;
+
     const files = tree.files.concat(this.dataToListOfFiles(data, file ? file.level + 1 : 0));
 
     tree.files = files;
@@ -236,7 +240,8 @@ const RepoHelper = {
     return Store.openedFiles.find(file => file.url === path);
   },
 
-  loadingError() {
+  loadingError(e) {
+    console.log(e);
     Flash('Unable to load this content at this time.');
   },
 
diff --git a/app/controllers/projects/tree_controller.rb b/app/controllers/projects/tree_controller.rb
index 756f7e5df8c..f3719059f88 100644
--- a/app/controllers/projects/tree_controller.rb
+++ b/app/controllers/projects/tree_controller.rb
@@ -36,7 +36,6 @@ class Projects::TreeController < Projects::ApplicationController
 
       format.json do
         page_title @path.presence || _("Files"), @ref, @project.name_with_namespace
-        response.header['is-root'] = @path.empty?
 
         # n+1: https://gitlab.com/gitlab-org/gitlab-ce/issues/38261
         Gitlab::GitalyClient.allow_n_plus_1_calls do
diff --git a/spec/features/projects/tree/create_directory_spec.rb b/spec/features/projects/tree/create_directory_spec.rb
new file mode 100644
index 00000000000..4c1fa5a666e
--- /dev/null
+++ b/spec/features/projects/tree/create_directory_spec.rb
@@ -0,0 +1,43 @@
+require 'spec_helper'
+
+feature 'Multi-file editor new directory', :js do
+  include WaitForRequests
+
+  let(:user) { create(:user) }
+  let(:project) { create(:project, :repository) }
+
+  before do
+    project.add_master(user)
+    sign_in(user)
+
+    page.driver.set_cookie('new_repo', 'true')
+
+    visit project_tree_path(project, :master)
+
+    wait_for_requests
+  end
+
+  it 'creates directory in current directory' do
+    find('.add-to-tree').click
+
+    click_link('New directory')
+
+    page.within('.popup-dialog') do
+      find('.form-control').set('foldername')
+
+      click_button('Create directory')
+    end
+
+    fill_in('commit-message', with: 'commit message')
+
+    click_button('Commit 1 file')
+
+    expect(page).to have_content('Your changes have been committed')
+    expect(page).to have_selector('td', text: 'commit message')
+
+    click_link('foldername')
+
+    expect(page).to have_selector('td', text: 'commit message', count: 2)
+    expect(page).to have_selector('td', text: '.gitkeep')
+  end
+end
diff --git a/spec/features/projects/tree/create_file_spec.rb b/spec/features/projects/tree/create_file_spec.rb
new file mode 100644
index 00000000000..a67ec891e7c
--- /dev/null
+++ b/spec/features/projects/tree/create_file_spec.rb
@@ -0,0 +1,40 @@
+require 'spec_helper'
+
+feature 'Multi-file editor new file', :js do
+  include WaitForRequests
+
+  let(:user) { create(:user) }
+  let(:project) { create(:project, :repository) }
+
+  before do
+    project.add_master(user)
+    sign_in(user)
+
+    page.driver.set_cookie('new_repo', 'true')
+
+    visit project_tree_path(project, :master)
+
+    wait_for_requests
+  end
+
+  it 'creates file in current directory' do
+    find('.add-to-tree').click
+
+    click_link('New file')
+
+    page.within('.popup-dialog') do
+      find('.form-control').set('filename')
+
+      click_button('Create file')
+    end
+
+    find('.inputarea').send_keys('file content')
+
+    fill_in('commit-message', with: 'commit message')
+
+    click_button('Commit 1 file')
+
+    expect(page).to have_content('Your changes have been committed')
+    expect(page).to have_selector('td', text: 'commit message')
+  end
+end
diff --git a/spec/javascripts/repo/components/new_dropdown/modal_spec.js b/spec/javascripts/repo/components/new_dropdown/modal_spec.js
index 4be92e9d944..671dca93a09 100644
--- a/spec/javascripts/repo/components/new_dropdown/modal_spec.js
+++ b/spec/javascripts/repo/components/new_dropdown/modal_spec.js
@@ -71,6 +71,22 @@ describe('new file modal component', () => {
 
         expect(RepoStore.openedFiles.length).toBe(1);
       });
+
+      it(`creates ${type} in the current stores path`, () => {
+        RepoStore.path = 'testing';
+        vm.entryName = 'testing/app';
+
+        vm.$el.querySelector('.btn-success').click();
+
+        expect(RepoStore.files[0].path).toBe('testing/app');
+        expect(RepoStore.files[0].name).toBe('app');
+
+        if (type === 'tree') {
+          expect(RepoStore.files[0].files.length).toBe(1);
+        }
+
+        RepoStore.path = '';
+      });
     });
   });