(a) The governing body of a municipality by ordinance may issue refunding bonds in accordance with Subchapters A and D, Chapter 1207, to refund outstanding refunding bonds if:
(1) the bonds to be refunded were issued under a plan for the adjustment of the municipality's debts confirmed by a bankruptcy court under Title 11, United States Code; and
(2) the bonds do not mature in annual installments.
(b) The governing body of a municipality that issues bonds under this subchapter to refund revenue bonds may secure the bonds issued under this subchapter by a deed of trust on the municipality's utility system or by a pledge of the net revenue of the system if the bonds being refunded provide for that pledge.