At 02.37 hours on 27 March 1942, USS Atik (AK 101) (LtCdr Harry Lynnwood Hicks, USN) was hit on the port side ahead of the bridge by one G7e torpedo from U-123 about 300 miles east of Norfolk. The ship caught fire where it was hit and settled by the bow with a list to port. When Hardegen observed how the crew abandoned ship on starboard he went closer to finish off the vessel. Waiting for this moment, USS Atik dropped her concealment and opened fire from all weapons including depth charge projectors. The U-boat immediately ran off at utmost speed and was only hit at the bridge by .50cal fire which fatally wounded Fähnrich zur See Rudi Holzer. U-123 dived when out of range and approached the Q-ship which did not sink due her floating cargo. At 04.29 hours, a coup de grâce was fired into the engine room and the ship settled by the bow until the screw was out of the water. The U-boat observed how the crew abandoned ship again and waited nearby for the vessel to sink. At 05.50 hours, USS Atik was gone after several heavy detonations, probably the fire had ignited the ammunition aboard and the depth charges went off when the ship sank. About 08.00 hours, the Germans buried Holzer at sea in position 35°38’N/70°14’W.

After recieving her distress signals USS Noa (DD 343), USS Sagamore (AT 20), her sistership USS Asterion (AK 100) (LtCdr Legwen, USN) and several aircraft conducted a fruitless search for survivors the next few days, the only signs found were debris and five empty rafts sighted by aircraft at 34°52N/69°58W on 30 March. All hands were lost, either in the explosion when the ship sank or during a gale that hit the area shortly afterwards.