At 18.50 hours on 17 March 1945, HMCS Guysborough (J 52) (T/Lt B.T.R. Russell, RCNR) was hit on the port side in the stern by a Gnat from U-868 about 210 miles north of Cape Finisterre in the Bay of Biscay. Sailing alone the minesweeper towed a CAT gear against acoustic torpedoes but the Gnat nevertheless hit the stern, probably because the gear was streamed too close to the ship to confuse the warhead. Settling by the destroyed stern with a slight list to port, the vessel did not sink and the U-boat fired a coup de grâce at 19.35 hours. The torpedo hit on the starboard side amidships and caused the minesweeper to sink fast by the stern.

Two crew members had been killed in the explosions and the remaining men had to abandon ship on five Carley floats because the motor cutter and the whaler were unusable. A first group of 48 survivors lashed four rafts together, while the fifth raft drifted away overcrowded by the remaining men. They had managed to send a distress signal and several vessels were sent to their rescue, but it took HMS Inglis (K 570) (T/A/LtCdr A.P. Cobbold, RNVR) around 19 hours to arrive. In the meantime many of the men clinging to the overcrowded floats had died of injuries or exposure, including two passengers. The frigate picked up the survivors, among them the commander and one passenger and took them to Falmouth.