It looks like I'm loosing my directory handle but I can't figure out why.

DIR is a global filehandle. When you recurse, you re-use that same global directory handle and the previous level's use of it gets over-written.

You have two options:

1. Use lexical handles: In place of DIR & FILE use:

     opendir( my $dh, $dir) or die $!;
     while ($file = readdir( $dh ))
   ...
     open( my $fh, $FullName) or die 
   ...
   [download]

2. Or localise those global handles: Add the following to the top of your sub

   sub ScanDir
   {
       local( DIR, FILE );
   ...
   [download]

One requires minimum changes; the other is seen as the "Modern" option. Both will work.