7-7-132. Procedure to declare bankruptcy. (1) A local entity may submit itself and a proposed plan of adjustment to the jurisdiction of the bankruptcy court having jurisdiction of the matter. If the local entity submits a proposed plan of adjustment, it is governed, subject to the provisions of Montana law applicable to the local entity, by the proceedings, orders, and decrees of the court as provided by the federal municipal bankruptcy laws.

(2) The local entity shall compose and enter into, submit itself to, and perform the plan of adjustment as required by the federal laws and the orders and decrees of the bankruptcy court:

(a) upon the adoption by its legislative body of an ordinance or resolution:

(i) declaring that it is insolvent or unable to meet its debts as they mature;

(ii) declaring that it desires to effect a plan for the adjustment of its debts under the provisions of the federal municipal bankruptcy laws; and

(iii) providing that the local entity shall proceed to the adjustment of its indebtedness under the provisions of the federal laws; and

(b) upon the acceptance or considered acceptance of the proposed plan of adjustment of the petitioning local entity as provided in the federal laws.