The definition of insolvency is when a company is unable to pay it's creditors on time (whether the money is borrowed or not) and/or the liabilities exceed the assets. Staff are creditors of the company and therefore if the wages cannot be paid, the company is insolvent and the directors have a legal responsibility to cease trading and advise the authorities
Not arguing with the strict definition but if it were applied strictly across the board there would be a lot of insolvent companies out there!
In practice with the backing of the banks and creditors (including staff as you say) companies can trade for a substantial time while technically insolvent. Some have done so as a matter of course in the past when credit was cheap and easily available!
Corporate creditors tend not to apply for winding up orders as they know a bankrupt customer will only repay a few cents in the dollar. Likewise, withholding supplies can force a company into liquidation with the same effects. A large supplier may be willing to do this to avoid throwing good money after bad but a smaller one (and staff) may not want to precipitate such a situation if they feel the money owed is too great for them to risk losing it. In the end it's down to whether creditors feel the company can trade its way back on an even keel with their support.
Again I must stress I am making no judgements on the position of MK itself, though I'm pleased they are hanging on in there now that the world economy looks a little less bleak than it did a year ago.