Unable to connect due to loopback-mounted zombie

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sudo xm create -c /etc/xen/xen5.cfg
Error: Device 769 (vbd) could not be connected.
File /myimage is loopback-mounted through /dev/loop16,
which is mounted in a guest domain,
and so cannot be mounted now

The solution that cleaned everything up:

xenstore-rm backend/vbd

After running xenstore-rm I was able to create xen5.

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