diff --git a/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelArrangement.kt b/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelArrangement.kt
index 3ca54b27483..485ca4f0dbc 100644
--- a/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelArrangement.kt
+++ b/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelArrangement.kt
@@ -31,6 +31,7 @@ import com.wire.android.ui.home.newconversation.common.CreateGroupState
 import com.wire.android.ui.home.newconversation.model.Contact
 import com.wire.android.util.ui.WireSessionImageLoader
 import com.wire.kalium.logic.CoreFailure
+import com.wire.kalium.logic.StorageFailure
 import com.wire.kalium.logic.data.conversation.Conversation
 import com.wire.kalium.logic.data.conversation.MutedConversationStatus
 import com.wire.kalium.logic.data.id.ConversationId
@@ -213,6 +214,18 @@ internal class NewConversationViewModelArrangement {
         coEvery { searchKnownUsers(any()) } returns flowOf(SearchUsersResult.Failure.InvalidRequest)
     }
 
+    fun withFailureGetAllKnownUsersResponse() = apply {
+        coEvery { getAllKnownUsers() } returns flowOf(GetAllContactsResult.Failure(StorageFailure.DataNotFound))
+    }
+
+    fun withEmptySuccessGetAllKnownUsersResponse() = apply {
+        coEvery { getAllKnownUsers() } returns flowOf(GetAllContactsResult.Success(emptyList()))
+    }
+
+    fun withSuccessGetAllKnownUsersResponse() = apply {
+        coEvery { getAllKnownUsers() } returns flowOf(GetAllContactsResult.Success(listOf(FEDERATED_KNOWN_USER)))
+    }
+
     fun withFailurePublicSearchResponse() = apply {
         coEvery { searchPublicUsers(any()) } returns flowOf(SearchUsersResult.Failure.InvalidRequest)
     }
diff --git a/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelTest.kt b/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelTest.kt
index 121b98ed3a6..932c0a2a126 100644
--- a/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelTest.kt
+++ b/app/src/test/kotlin/com/wire/android/ui/home/newconversation/NewConversationViewModelTest.kt
@@ -247,4 +247,46 @@ class NewConversationViewModelTest {
             )
         }
     }
+
+    @Test
+    fun `given user has no contacts and getting contacts succeeded, then initialContacts has value of EmptyResult`() {
+        runTest {
+            // Given
+            val (_, viewModel) = NewConversationViewModelArrangement()
+                .withIsSelfTeamMember(true)
+                .withEmptySuccessGetAllKnownUsersResponse()
+                .arrange()
+            advanceUntilIdle()
+            // Then
+            assert(viewModel.state.initialContacts is SearchResultState.EmptyResult)
+        }
+    }
+
+    @Test
+    fun `given user has some contacts and getting contacts succeeded, then initialContacts has value of Success`() {
+        runTest {
+            // Given
+            val (_, viewModel) = NewConversationViewModelArrangement()
+                .withIsSelfTeamMember(true)
+                .withSuccessGetAllKnownUsersResponse()
+                .arrange()
+            advanceUntilIdle()
+            // Then
+            assert(viewModel.state.initialContacts is SearchResultState.Success)
+        }
+    }
+
+    @Test
+    fun `given user has some contacts and getting contacts failed, then initialContacts has value of Failure`() {
+        runTest {
+            // Given
+            val (_, viewModel) = NewConversationViewModelArrangement()
+                .withIsSelfTeamMember(true)
+                .withFailureGetAllKnownUsersResponse()
+                .arrange()
+            advanceUntilIdle()
+            // Then
+            assert(viewModel.state.initialContacts is SearchResultState.Failure)
+        }
+    }
 }