Probably U-432 first attacked the Pennmar about 19.00 hours on 23 September in 58°25N/32°15W, when a torpedo was spotted approaching the ship from the starboard quarter and avoided by a hard left rudder, while later another torpedo passed ahead. One hour later they saw an U-boat surfacing on the starboard quarter, which was taken under fire from the 4in stern gun. After four rounds were fired the U-boat submerged.

At 01.44 hours on 24 September, U-432 managed to hit the Pennmar with one torpedo after three others had missed due to the heavy seas and evasive maneuvers. The torpedo struck on the port side about 30 feet from the bow near the fore peak oil tank, while a second torpedo was seen by a lookout to pass under the ship. The eight officers 31 crewmen and 22 armed guards (the ship was armed with one 4in, one 3in, four 20mm, four .50cal and two .30cal guns) abandoned ship in one lifeboat and two rafts, while the ship began to settle by the bow rapidly sinking after eleven minutes. One man died after being crushed between a raft and the ship and another drowned near the propeller of the ship. The survivors were picked up the same day by the US Coast Guard cutter USS Bibb (WPG 31) and taken to Reykjavik, arriving on 2 October.