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For context for others:
"bankrupt" is also a misleading term used by the government when it simply means the council cannot meet its budget assigned by the government, which prior to Keith Stürmer was notorious for bleeding dry Labour councils.
It's basically a legal rule that forces the councils into austerity or lose all political autonomy to the government, that enforced "special measures". In practice it is not unlike the Turkish state practice of evicting Kurdish mayors and councillors to be replaced with government stooges.
No doubt these councils are run like shit, though. The whole system has been designed to ensure every last prick is scooping the scum off the top.