At 06.43 hours on 23 Feb 1942 the unescorted Lihue (Master W.G. Leithead) was torpedoed by U-161 about 275 miles west of Martinique. One torpedo struck on the port side forward of the #1 hold. About 15 minutes later, the U-boat surfaced and fired a few shots from its deck gun until the armed guards returned fire with her armament of one 3in, four .50cal and two .30cal guns, forcing the U-boat to submerge. The ship then evaded two torpedoes at 18.39 and 18.54 hours and the U-boat ceased the attack, because Achilles thought that the Lihue was possibly a Q-ship.

But after the unsuccessful attack in the evening, the crew of eight officers, 28 crewmen and nine armed guards abandoned ship in two lifeboats and three rafts. They were all picked up four hours later by the British steam tanker British Governor, after a US Navy aircraft had directed the ship to the lifeboats. A salvage party from HMCS Prince Henry (F 70) (Capt J.C.I. Edwards, RCN) boarded the Lihue in an attempt to save her, but the ship sank on 26 February while being towed to St. Lucia by USS Partridge (AM 16).