Pratt Falls Salmon Lodge

Abstract

In this case, students are introduced to Dwight Lethbridge, who, along with two partners, owns and operates Pratt Falls Salmon Lodge on the Eagle River in Labrador. The owners borrowed heavily to purchase the fishing lodge in April 2009. Later that year, they financed the lodge’s first season with an operating line of credit. In September, their credit union advised them that it considered the lodge to be a seasonal business and that, if the credit line was not repaid by the end of October, the owners would be charged a higher rate of interest as if the debt were an overdraft. The owners did not have enough capital to repay the line of credit and knew they would not be able to sustain the higher payments through the winter and then operate the lodge the following season. They wondered what they should do.