I'm on the same kernel

Linux sl 4.4.0-8-generic #23-Ubuntu SMP Wed Feb 24 20:45:30 UTC 2016
x86_64 x86_64 x86_64 GNU/Linux

and also have the tracefs mounted

0 ✓ serge@sl ~ $ grep debug /proc/self/mountinfo
74 19 0:7 / /sys/kernel/debug rw,relatime shared:26 - debugfs debugfs rw
44 74 0:9 / /sys/kernel/debug/tracing rw,relatime shared:29 - tracefs tracefs rw

but trusty (upstart-based) containers start fine for me, using lxc
version 2.0.0~rc4+master~20160229-0647-0ubuntu1~xenial and lxd from git
HEAD.

Very odd therefore that unmounting and re-mounting debugfs works for
you...

Will try in a fresh vm.

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https://bugs.launchpad.net/bugs/1551854

Title:
  LXD bootstrap issues on xenial

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