At 06.17 hours on 12 Sep, 1942, U-404 (von Bülow) fired single torpedoes at the convoy ON-127 in 49°02N/33°30W and heard detonations after 2 minutes 15 seconds, 2 minutes 56 seconds and 3 minutes 30 seconds and then sinking noises. Bülow claimed three ships sunk, however, only the Daghild was hit.

The Daghild (Master Olaf K. Egidius) was struck by one torpedo, which made a hole of 50 x 54 feet as well as 20 holes on the opposite side, so that it was possible to see through the ship. She reached St.Johns for repairs and proceeded via Sydney and Halifax for degaussing to New York for further repairs.
After two months for repairs, she was fitted with an extra deck for carrying aircraft. She was not ready to go out again until January 1943 and it was immediately discovered that she was extremely diffcult to maneuver after the new deck had been added. She had the tendency to want to go to the right. However, due to heavy snow, most of the ships in convoy SC-117 were separated and it was decided to take Daghild to St. Johns after having searched for the convoy for a whole day in vain, arriving there on 23 January. She left after a week to join the convoy SC-118.

The survivors were picked up from three lifeboats by FFL Lobelia (K 05) the next morning. The corvette later encountered the Greek steam merchant Adamas (4144 grt) in sinking condition after she had been rammed by a destroyer in 56°35N/22°23W, while proceeding in the same convoy. FFL Lobelia (K 05) picked up eleven men and ordered the remaining men on the ship to stay on board until daylight. But many jumped overboard and died in the cold water. The corvette could only pick up two men and revive them. Not long afterwards they encountered a wreck drifting around upside down (perhaps the Daghild) and was ordered to sink it, but after several attempts they had to stop because her engine was damaged and could only made two knots. FFL Lobelia (K 05) had now over 100 people on board, a damaged engine and the U-boat danger was ever present. The next morning the Admiralty sent a destroyer to assist, which took the corvette in tow until that evening, when the destroyer had to search for a lifeboat with 15 men in it, which was sighted by an aircraft. The destroyer returned the next morning, without having found the lifeboat, but at that time FFL Lobelia (K 05) was able to do 8 knots on her own and proceed alone, because the destroyer, having about 140 shipwrecked people on board had to go to port. The corvette arrived safely at Greenock on 12 February.