Councils cannot go bankrupt in the same way a private company or individual can. We are, however, legally required to balance our books each year. If we are unable to do so, we may be forced to file what is called a Section 114 notice.
A Section 114 notice allows national government to step in and manage our finances. They will likely reducing council services to the bare essentials. It will also require us to put a stop to all non-essential spending.