Each processor in a multi-processor system is periodically interrupted for preempting the current thread for servicing of a watchdog thread during normal operation. Upon failing to service the watchdog thread over a grace period, a system watchdog initiates an orderly shutdown and reboot of the system. In order to prevent spinlocks from causing fake panics, if the current thread is holding one or more spinlocks when the interrupt occurs, then preemption is deferred until the thread releases the spinlocks. For diagnostic purposes, a count is kept of the number of times that preemption is deferred for each processor during each watchdog grace period.