At 19.56 hours on 4 April 1941 the unescorted Athenic (Master Ernest William Agnes), dispersed from convoy SC-26, was hit on the starboard side in #2 hold by one stern torpedo from U-76 about 340 miles south of Reykjavik. The explosion opened a large hole, blew the hatch covers off and damaged the bridge, injuring the chief officer on watch. About 28 hours earlier, the ship picked up eleven survivors from Liguria which had been sunk by U-46 (Endrass) on 29 March, but one of them died of exposure. The master, 35 crew members, two gunners (the ship was armed with one 4in, one 12pdr and two machine guns) and the ten survivors immediately abandoned ship in the lifeboats in very rough seas when she developed a list to starboard. At 20.35 hours, the ship was struck on the port side in #4 hold just abaft the engine room by a coup de grâce and after 17 minutes she rolled over to starboard and sank.

U-76 left the area without questioning the survivors because the Athenic had sent distress signals and the Germans correctly assumed that escort ships from the dispersed convoy were heading for the scene. At dawn the next morning, the U-boat was located by the warships, forced to surface after several depth charge attacks and sank after the crew abandoned ship. The Germans were taken prisoner by HMS Arbutus (K 86) (Lt A.L.W. Warren, RNR), which subsequently searched for the lifeboats and picked up the survivors at 14.15 hours, landing them at Liverpool on 8 April.