If the rot there because of the worms or the worms because of the rot. I cut two of these down about three years ago and have been knocking the new shoots off ever since so they are pretty robust. If the top dies then cut it down and new shoots will come but you will end up with more than one truck. Is the ground waterlogged at all? It does not look good from your description.

It sounds to me as if your Cordyline has been damaged during one or two previous winters. Recommend you cut the whole thing down beyond the point where the bark is flaking, and beyond the point where the new, yellowing growth is appearing. Cut at an angle to allow rain to run off - new shoots should appear at least from the base if not higher up. The alternative is to wait and see if it eventually develops slime flux, which is very likely. You'll know when it does - it'll be oozing and won't smell good.