At 20.43 hours on 2 June 1941 the Michael E. (Master Murdo MacLeod), dispersed on 1 June from convoy OB-327, was hit on the port side at the after end of #5 hold by one of two torpedoes from U-108 while steaming on a non-evasive course at 10 knots in hazy weather about 700 miles southwest of Cape Clear. Two hours earlier, the U-boat had spotted three ships from the dispersed convoy and decided to attack the second one at dusk. The explosion opened a large hole in the port side and the upper deck, blew the hatch covers onto the top deck and broke the shaft which stopped the engines immediately. After sending a distress signal and discussing the possibility of launching the Hurricane fighter from its catapult, the crew of 35, five gunners (the ship was armed with one 4in, one 12pdr and four machine guns) and eleven FAA personnel, including two pilots and a fighter direction officer (FDO), began to abandon ship in four lifeboats as the ship quickly settled by the stern without a list. The torpedo had hit underneath the mess used by the naval ratings, killing two and wounding twelve others, three of them seriously. At 22.21 hours, the ship sank vertically by the stern. The U-boat surfaced shortly afterwards and questioned the survivors in each lifeboat before leaving.

The boats then set sail and two of them were spotted by Alcinous, the ship of convoy commodore from the dispersed convoy OB-328, in the afternoon on 3 June in 49°46N/27°42W. The ship picked up the occupants and afterwards searched for the other two boats, locating them about 5 miles away. However, a crew member died of injuries and was buried at sea on 9 June. On 10 June, the survivors were landed at Halifax and the injured men were taken to a hospital where an air fitter died of injuries later that day.