Using a one-dimensional electrostatic particle code, we examine processes associated with current interruption in a collisionless plasma when a density depression is present along the current channel. Current interruption due to double layers was suggested by Alfven and Carlqvist (1967) as a cause of solar flares. At a local density depression, plasma instabilities caused by an electron current flow are accentuated, leading to current disruption. Our simulation study encompasses a wide range of the parameters in such a way that under appropriate conditions, both the Alfven and Carlqvist (1967) regime and the Smith and Priest (1972) regime take place. In the latter regime the density depression decays into a stationary structure (‘ion-acoustic layer’) which spawns a series of ion-acoustic ‘solitons’ and ion phase space holes travelling upstream. A large inductance of the current circuit tends to enhance the plasma instabilities.