I don't know the details for this case, but the principal authority (usually the district council) has reserve powers to deal with problems arising from a parish council being unable to function. They are also involved in the setting up of a council where one has not previously existed. They can also certainly take actions such as appointing additional members where there are two few councillors to reach a quorum.
I believe that it is possible for a parish council to decide that it wishes to cease to exist and to tell the district council of its decision. Or the wishes of the parish could be determined at a parish meeting if the council has ceased to function.
No doubt the legal officers at the district council could answer this question more fully if the situation actually looks likely to arise.