When you sell a house, you have pay off the mortgage first before putting the capital gains against another asset.
If you bought a snowmobile with a second mortgage against your house, and then sell your house, you have to payoff the house and the snowmobile before buying a new house.
What’s confusing me about the debt, is a statement that shedding payroll reduces it in a significant way. Cutting expenses can free up cash to reduce future debt, but debt incurred is debt incurred. It’s like scrapping inventory, you took on debt to buy the inventory, but didn’t sell it. If you scrap the inventory, you still have the debt.