Facing the same issue with KVM enabled L2 VM on following setup
CPU Model - Skylake-Client
L0: Ubuntu 16.04.3 LTS Kernel - 4.4.0-98-generic & 4.4.0-101-generic
libvirtd (libvirt) 2.5.0-3ubuntu5.5~cloud0 QEMU emulator version 2.8.0(Debian 1:2.8+dfsg-3ubuntu2.5~cloud0)
L1: Ubuntu 16.04.3 LTS Kernel - 4.4.0-98-generic
libvirtd (libvirt) 1.3.1-1ubuntu10.15 QEMU emulator version 2.5.0 (Debian 1:2.5+dfsg-5ubuntu10.16)
Able to launch L2 VM in qemu mode.
With same L0,L1 configuration able to launch L2 VM even with KVM on SandyBridge Machine
Facing the same issue with KVM enabled L2 VM on following setup
CPU Model - Skylake-Client
L0:
Ubuntu 16.04.3 LTS
Kernel - 4.4.0-98-generic & 4.4.0-101-generic
libvirtd (libvirt) 2.5.0-3ubuntu5. 5~cloud0 3ubuntu2. 5~cloud0)
QEMU emulator version 2.8.0(Debian 1:2.8+dfsg-
L1:
Ubuntu 16.04.3 LTS
Kernel - 4.4.0-98-generic
libvirtd (libvirt) 1.3.1-1ubuntu10.15 5ubuntu10. 16)
QEMU emulator version 2.5.0 (Debian 1:2.5+dfsg-
Able to launch L2 VM in qemu mode.
With same L0,L1 configuration able to launch L2 VM even with KVM on SandyBridge Machine