The automatic directory creation option (ctAUTOMKDIR in xcreblk splval field) was not working for TRNLOG transaction-dependent files. The file create failed with error 17 instead of creating the missing directories.
A workaround was available: Disable file system metadata flushing by adding COMPATIBILITY NO_FLUSH_DIR to ctsrvr.cfg and restart c-tree Server.
The logic has been modified to correct this problem.