Both parties incorrectly (arguably, equally negligently) believed Starfish's high-interest loan model was sound. There's no evidence in the contract that the risk that the business model was fundamentally unsound was intended to be allocated to Patrick. So the contract cannot equitably be enforced as drafted because a situation not foreseen by the contract came to be. The risk of the unsound business model has to be allocated among the parties somehow, the contract doesn't specify how to allocate it, equity demands it be split.
Patrick described his deposits as guaranteed. He stated that he carries the risk from bad loans. That means that he takes the loss if his loans go bad.
Patrick knew that the loans were risky and had the "potential to lose serious money":
I know there are some risks involved and potential to lose serious money on some of the loans I have out in the wild.
I have a diversified portfolio of investments, a good mix of customers and carry the risk from bad loans and the timing of requests.
This isnt a charity and there is real money at stake. For January 2012 I have done a dozen loans, have one bad and another was impaired for a while before being paid back. There are two others due in February that I've flagged as higher risk, thats why the interest rates are high.
Lending and Seeking a Loan
I decide if youre a good credit risk or not.
These quotes show that the risk that the business model was unsound was intended to be allocated to Patrick. Even though he knew he had the "potential to lose serious money" on his loans, Patrick guaranteed his deposits and explicitly stated that he carries the risk for bad loans. Thus, Patrick is on the hook for all of the losses and is responsible for paying pack his deposits. Simple.
Patrick is doing his best to live up to his promise, as he should, and I commend him for it.