diff -ur silc-server-1.0.2.orig/apps/silcd/command.c silc-server-1.0.2/apps/silcd/command.c
--- silc-server-1.0.2.orig/apps/silcd/command.c	2007-03-06 11:21:40.000000000 +0100
+++ silc-server-1.0.2/apps/silcd/command.c	2007-03-06 12:41:55.000000000 +0100
@@ -2441,10 +2441,22 @@
 	  channel = silc_server_create_new_channel(server, server->id, cipher,
 						   hmac, channel_name, TRUE);
 	  if (!channel) {
-	    silc_server_command_send_status_data(
-				  cmd, SILC_COMMAND_JOIN,
-				  SILC_STATUS_ERR_UNKNOWN_ALGORITHM,
-				  0, 2, cipher, strlen(cipher));
+	    if (cipher) {
+		silc_server_command_send_status_data(
+				      cmd, SILC_COMMAND_JOIN,
+				      SILC_STATUS_ERR_UNKNOWN_ALGORITHM,
+				      0, 2, cipher, strlen(cipher));
+	    } else if (hmac) {
+		silc_server_command_send_status_data(
+				      cmd, SILC_COMMAND_JOIN,
+				      SILC_STATUS_ERR_UNKNOWN_ALGORITHM,
+				      0, 2, hmac, strlen(hmac));
+	    } else {
+		silc_server_command_send_status_reply(
+				      cmd, SILC_COMMAND_JOIN,
+				      SILC_STATUS_ERR_RESOURCE_LIMIT,
+				      0);
+	    }
 	    silc_free(client_id);
 	    goto out;
 	  }