The Hoosier (Master Julius Holmgren) had been in convoy PQ-17 which was dispersed on Admiralty orders in the Barents Sea on 4 July 1942. She reached Novaya Zemlya where she joined five other merchants and eight escort vessels from convoy in the Matochkin Strait. Commodore Dowding assembled a small convoy out of them and then proceeded on 7 July to Murmansk and Archangel.
On 9 July, the small convoy was attacked by several German Junkers Ju88 aircraft of II. and III./KG 30 about 65 miles northeast of Iokanka. The first stick of bombs missed the Hoosier, but the second hit five feet from the boat deck and the third 20 yards away. These explosions damaged the steam pipes and oil lines, sprung some of the hull plates and disabled the engines. The eight officers, 34 crewmen and eleven armed guards (the ship was armed with one 4in, four .50 cal and two .30 cal guns) abandoned ship in four lifeboats and were picked up by HMS Poppy (K 213) (Lt N.K. Boyd, RNR) in 69°45N/39°35E.

The commander of HMS La Malouine (K 46) (Lt V.D.H. Bidwell, RNR) decided to tow the ship in and put a salvage crew back on board, that included the engineers of the vessel. But when U-255 (Reche) was sighted four miles astern, the corvette expeditiously dropped the tow and recovered the boarding party. HMS Poppy (K 213) unsuccessfully tried to sink her with gunfire.

At 02.56 hours on 10 July, the burning and drifting wreck of the Hoosier was hit by one torpedo from U-376. Another torpedo fired at 03.02 hours missed and the vessel only sank by the bow after being hit in the engine room by a coup de grâce five minutes later.