The power system vulnerability leads to faults and the severity of the fault may lead to prolonged load-shedding. The power system needs to be configured in extreme failure scenarios for protecting the network from further contingencies and prolonged load-shedding. Distributed generation resources (DGs) can be useful to form intentional islands after faults to maintain the continuity of power supply to loads based on their weightage during faulty periods and to reduce overall load shedding duration. Power system is bound to collapses and secondary collapse in the formed island is possible. This research represents a novel method of impedance based path finding for intentional islanding, which adapts itself with the changes in the demands, DGs outputs or further severities during restoration period. In this adaptive islanding approach, network adjusts itself with the changes in either the load demands or renewable DGs outputs and rearranges the restoration plan by curtailing or adding some of the loads through controllable switches. Further a secondary collapse in the existing island is studied by injecting multiple faults at various positions of the network to validate the system resilience to cope with severities. A short-term load forecasting approach is used to predict changes in load demands and variations in DG outputs during the islanding scheme. During the restoration period, these variations are tracked and the islands are modified accordingly. In order to minimize the overall generation cost by using less fuel, an economical approach is used in the selection of controllable DGs. The proposed approach is formulated as a multi-objective, that incorporates several operational constraints and simulation is carried out using the modified IEEE 69-bus distribution system to assess the efficacy of the proposed model.