Starcom Ltd is a successful company that owns five boutique hotels in Sydney and Melbourne. It has been operating for seven years and has a board comprising Stephen, Eliza, Mun Yee, Joseph, Omar and Kiera. The six directors and their partners are the main shareholders in the company. Joseph is the managing director and Kiera is the financial officer and company secretary.

Twelve months ago (June 2023) the board decided to expand the business by buying another hotel in Sydney. To raise capital for this, it issued 6000 $100 preference shares to the directors (1000 per director). The shares are partly paid to $1 each.

It also approved Kiera negotiating with Finance Bank Ltd for a $5 million loan to assist with the purchase. The bank requested security for the loan and was granted a mortgage over the Sydney property.

Five months later (Nov 2023), the board approved the company's annual financial report. Believing the company to be in a good financial position, two months ago the board purchased 10 new Australian artworks for the properties with the collective value of the artworks being $5 million dollars. The directors believe that it is important to support young Australian artists.

For the last month, the company has been having trouble making repayments on the loan with Finance Bank Ltd. This is due partly to increases in the cost of living as there are fewer people travelling.

The board is worried as Kiera has stopped answering her phone and has moved out of her apartment. She has not been seen or heard from for the last 10 days.

The board has come to you for advice on the following: make reference to Corporations Act 2001 (cth) The board is concerned about the purchase of the new artworks. They have heard that if a liquidator is appointed, the contracts may not be valid. They have also heard that the directors may face liability in relation to the purchases. Could this be true?