States, territories, and countries don’t need to “declare” bankruptcy or go through federal “bankruptcy court.” They are sovereign entities, i.e. they can just decide to stop paying their bills. There is no court which can force them to do anything. They have to face the market for future debt issues of course, and there’s traditionally been a threat of war against sovereigns which don’t pay their bills. No need for the US federal government to pay off or even help “restructure” the debts of a foreign country.
Yes, but this change is designed to create a precedent whereby cities like Chicago and New York and Baltimore can petition for similar treatment in order to alleviate their pension shortfalls and high borrowing costs. Once a non-state receives help, there is nothing to stop the handouts to real American cities.