Tetrabutylammonium cyanide (20 mol %) catalyzes ring expansion of 4-(arylimino)methylazetidin-2-ones 2 to 5-aryliminopyrrolidin-2-ones 3 through a novel N1-C4 bond cleavage of the beta-lactam nucleus. New, efficient one-pot protocols to enantiopure succinimide derivatives 3 and 4 from beta-lactam aldehydes 1 have also been developed. [reaction: see text]