On 18 Nov 1939 the blockade runner Borkum was captured by HMS California (F 55) (Capt C.J. Pope, RAN) in the Denmark Strait and a prize crew was ordered to bring the ship to Kirkwall.

At 15.30 hours on 23 November, U-33 ordered Borkum (LtCdr B. Moloney, RNR) to stop for contraband control near the Orkneys, assuming that she is a neutral vessel, but the ship did not stop after two shots across her bow so the next round was fired at the bridge. The ship turned hard and apparently tried to ram the U-boat which shelled the ship and then dived. The Borkum had caught fire and circled out of control, so she proved to be a difficult target and only one of three torpedoes hit. U-33 surfaced and fired 4 rounds into the waterline but then had to left the area when the armed boarding vessels Kingston Beryl and Kingston Onyx appeared. Four German crew members had been killed, but the remaining Germans and the British prize crew abandoned ship and were picked up by the armed boarding vessels.

On 25 November, the abandoned wreck of Borkum drifted ashore in Papa Sound and was declared a total loss. On 18 Aug 1940 the ship was refloated and towed to Rosyth, where she was broken up in October 1940.