 Solution

Amide base removes a proton alpha to the nitrile, giving a resonance-stabilized carbon nucleophile. Removal of the available aryl proton ortho to chlorine, together with chloride elimination, generates a benzyne between the chlorine-bearing carbon and its unsubstituted ortho neighbour. The side-chain nitrile carbanion attacks the former chlorine-bearing aryne carbon intramolecularly; one aryne pi bond shifts to the neighbouring aryl carbon. Protonation of that aryl anion by ammonia restores the aromatic ring. The newly formed C–C bond closes the four-membered ring of the cyanobenzocyclobutane product. Two deprotonation processes are required to generate both the nitrile nucleophile and the aryne. The nitrile group is retained, and the product is not formed by simple replacement of aryl chlorine with an external amide nucleophile.