In the afternoon on 20 March 1945, U-968 attacked convoy JW-65 and reported a destroyer and a Liberty sunk and another Liberty ship torpedoed. In fact, the sloop HMS Lapwing (U 62) of the 7th Escort Group and the Liberty ship Thomas Donaldson were sunk.

The Thomas Donaldon (Master Robert Headden) was the twentieth ship as convoy formed into one column to enter Kola Inlet and was hit at 13.15 hours on the starboard side by one torpedo about 20 miles from the mouth of Kola Inlet. The torpedo struck the engine room, killed one officer and two crewmen on watch below and destroyed the engines. Due to her dangerous cargo the master ordered the crew of eight officers, 34 crewmen and 27 armed guards (the ship was armed with one 5in, one 3in and eight 20mm guns) to abandon ship after 10 minutes. The most left in the two port lifeboats and a raft and were picked up by HMS Bamborough Castle (K 412) (T/Lt M.S. Work, DSC and Bar, RNR), while others jumped overboard and were picked up by HMS Oxlip (K 123) (T/Lt J.K. Craig, RNVR). One man died after being rescued. The master and eight crew members remained aboard and were later taken off by HMS Honeysuckle (K 27) (T/Lt J.A. Wright, RNR), which took the ship in tow toward Kola Inlet. At 16.30 hours, a Soviet tug took over the tow but the Thomas Donaldson sank stern first at 17.45 hours, one-half mile from Kilden Island in 68°26´30N/33°44´20E.