At 22.57 hours on 27 June 1942 the unescorted Moldanger (Master Frode Bjørn Hansen) was torpedoed by U-404 about 300 miles southeast of Philadelphia. The torpedo struck on the port side amidships in the engine room, killing two men and disabling the radio equipment, so no distress calls were sent. The ship sank following a coup de grâce at 23.02 hours, which hit on the port side aft, near #5 hatch. The explosion killed eleven men, who were lowering a lifeboat just over the point where the torpedo hit. The master, an engineer and the carpenter were the last that left the ship by jumping overboard and swimming to a raft. The U-boat then surfaced and questioned the survivors before leaving the area.

The survivors distributed themselves between a gig, a motor lifeboat and three rafts, because the other lifeboats were damaged and unusable. They all stayed together for three days, but towing the rafts in heavy seas slowed them down, so they let one raft go on the second day after the men and supplies had been transferred. It was decided to let the motorboat and the gig continue towards land to get the injured under medical care and later send help to the rafts. On 4 July, one injured man in the motorboat died and was buried at sea. The remaining 15 men (including the master and the chief engineer) were picked up by HMCS Buctouche (K 179) (SkrLt G.N. Downey, RCNR) on 7 July. The six survivors in the gig were sighted on 15 July by a USAAF aircraft about 100 miles southeast of Ambrose Light. Food and water were dropped by the US Navy blimp K-9, which then stayed nearby until they were picked up by USS PC-495 and landed at Cape May, New Jersey the same day. The nine survivors on the two rafts drifted around for 48 days before they were rescued by the Norwegian motor merchant Washington Express on 14 August, all in remarkably good shape, considering what they had endured. They had travelled over 1000 miles towards the Azores and caught underway three large turtles and many fish.