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if you change the binary outout folder to a path with multiple subfolder then a new package will be create (e.g. new output folder : Proj/aa/bb/cc created package : aa.bb) To reproduce - create a new java project "Proj" with output binary folder /Proj/aa/bb/cc NOTES:
PRODUCT VERSION: build 0.113
The folder is left as is, this is a reasonable behavior. No smart action is taken on classpath/output location reorg. Closing