This bug was fixed in the package grub2-signed - 1.167~16.04.2

---------------
grub2-signed (1.167~16.04.2) xenial; urgency=medium

  * Remove the line GRUB_DISTRIBUTOR=Debian from
    /etc/default/grub.d/50-cloudimg-settings.cfg on select cloud images,
    namely those produced for GCE before 2020-11-11. This ensures that UEFI
    instances can locate efi executables and grub.cfg in correct directories
    since grub 2.04 seems to enforce pedantic locations. (LP: #1928040)

 -- Matthew Ruffell <[email protected]>  Tue, 11 May 2021
19:38:29 +1200

** Changed in: grub2-signed (Ubuntu Xenial)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1928040

Title:
  GCE instances drop to a grub prompt when GRUB_DISTRIBUTOR=Debian is
  set

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