The electrophilic phosphinidene complex PhPW(CO)5 reacts with bis(imine) 5, possessing a single carbon spacer, to give the C−N insertion product 6. B3LYP/6‐31G* calculations indicate that this process occurs by way of a 2,3‐sigmatropic shift from the initially formed phosphane ylide. The alternative, 1,3‐dipolar cycloaddition, followed by ring‐opening of the bicyclic structure, can be ruled out since both steps are energetically much more demanding. Ring‐closure to an azaphosphirane is also less favorable than the C−N insertion, which is in agreement with the absence of such a product in the experiment. (© Wiley‐VCH Verlag GmbH, 69451 Weinheim, Germany, 2002)