At 06.00 hours on 6 Sep, 1939, the unescorted Manaar (Master Campbell Shaw) was ordered to stop by U-38 with a shot across her bow about 70 miles southwest of Cape da Roca, but the ship began sending distress signals and fired back with her stern gun as the U-boat opened fire. After five hits on the vessel, killing seven crew members, the survivors abandoned ship in four lifeboats. At 07.20 hours, the U-boat fired a G7a torpedo that detonated prematurely in about 400 metres distance. Ten minutes later, a second coup de grâce was fired that hit the ship underneath the bridge, shortly thereafter followed by a second torpedo at about the same place, both without much effect. The ship then broke in two and sank after being hit by a third coup de grâce at 07.44 hours.

The master and 29 crew members were picked up by the Dutch merchant Mars and landed at Lisbon on 8 September. 16 crew members were picked up by the Portuguese merchant Carvalho Araujo and also landed at Lisbon. 17 other crew members were rescued by the Italian merchant Castelbianco.