On 31 January 1945, the Kriegsmarine reactivated her for Operation Hannibal, where she was used to transport 25,795 German soldiers and civilians from East Prussia to safer areas in western Germany.

Early on the morning of 11 February, the same submarine torpedoed the 14,666 GRT General von Steuben on its way to Copenhagen with wounded and bed-ridden soldiers and civilian passengers, killing over 4,000 people.

Eventually Heinrich Himmler agreed that these Scandinavians, and selected others regarded as less harmful to Germany, could be transported through German-occupied Denmark, north to freedom in neutral Sweden.

[14] In the interim, they were to be concealed from the advancing British and Canadian military forces from liberated Netherlands, along the North Sea coast, across northern Germany towards Denmark and the Baltic; and for this purpose the SS assembled a prison flotilla of decommissioned ships in the Bay of Lübeck, consisting of the requisitioned former civilian passenger ocean liners S.S. Cap Arcona and Deutschland, the freighter Thielbek, and the motor launch Athen [de].

Since the steering motors were out of use in the S.S. Thielbek and the turbines were out of use on the S.S. Cap Arcona, so then the smaller S.S. Athen was used to transfer prisoners from Lübeck to the larger vessels and in between ships;[15] they were locked below decks and in the holds, and denied food and medical attention.

[citation needed] On 30 April 1945 the two Swedish ships Magdalena and Lillie Matthiessen, previously employed as support vessels for the White Bus evacuations, made a final rescue trip to the Bay of Lübeck and back.

On the evening of 2 May 1945 more prisoners, mainly women and children from the Stutthof and Mittelbau-Dora camps were loaded onto barges and brought out to the anchored vessels; although, as the Cap Arcona refused to accept any more prisoners, over eight hundred were returned to the beach at Neustadt in the morning of 3 May, where around five hundred were killed in their barges by machine-gunning, or beaten to death on the beach, their German SS guards then seeking to make their escape unencumbered by "excess baggage".

Marc Buggeln has challenged Kaufmann's subsequent claim that he had been acting on orders from SS Headquarters in Berlin, arguing that the decision in fact resulted from political and business pressures from leading industrialists in Hamburg, who were already at this stage plotting with Kaufmann to hand the city over to approaching British forces undefended and unharmed, and who consequently wished to whitewash away (literally so in the case of the Neuengamme concentration camp)[14] all evidence for the prisoners' former presence within the city and its industries.

[18] By early May however, any relocation plans had been scotched by the rapid British military advance to the Baltic; so the SS leadership, which had moved to Flensburg on 28 April,[14] discussed scuttling the ships with the prisoners still captive aboard.

[16] Georg-Henning Graf von Bassewitz-Behr, Hamburg's last Higher SS and Police Leader (HSSPF), testified at the same trial that the prisoners were in fact to be killed "in compliance with Himmler's orders".

[20] Kurt Rickert, who had worked for Bassewitz-Behr, testified at the Hamburg War Crimes Trial that he believed the ships were to be sunk by Kriegsmarine submarine U-boats or Luftwaffe aircraft.

[25] On 3 May 1945, three days after Nazi German dictator Hitler's suicide in Berlin, and only one day before the unconditional surrender of the German troops in northwestern Germany at Lüneburg Heath to British Army commander Field Marshal Bernard Law Montgomery (1887–1976), S.S. Cap Arcona, S.S. Thielbek, and the passenger liner S.S. Deutschland were attacked as part of general strikes on shipping in the Baltic Sea by Royal Air Force (R.A.F.)

Through secret code-breaking of Ultra Intelligence, the Western Allies had become aware that most of the Nazi German SS leadership and former concentration camp commandants had gathered with Heinrich Himmler in Flensburg, hoping to contrive an escape northward to remaining German-occupied Norway.

[14][27] The western allies had intercepted orders from Hitler's designated successor with the rump Grand Admiral Karl Dönitz government, also at Flensburg, that the SS leadership were to be facilitated in escaping Allied capture – or otherwise issued with false Kriegsmarine naval uniforms to conceal their identities[28] – as Admiral Dönitz sought, while surrendering, to maintain the fiction that his administration had been free from involvement in the concentration camps, or in Hitler's policies of genocide and the revealing Holocaust.

(Supreme Headquarters Allied Expeditionary Force, commanded by Gen. Dwight D. Eisenhower), it is believed that important Nazis who have escaped from Berlin to Flensburg are onboard, and are fleeing to Norway or neutral countries".

Photos of the burning ships, listed as Deutschland, Thielbek, and Cap Arcona, and of the emaciated prisoner survivors swimming in the very cold Baltic Sea waters, around 7 °C (45 °F), were taken on a reconnaissance mission over the Bay of Lübeck by F-6 Mustang (the photo-reconnaissance version of the P-51) of the Allied United States Army Air Forces (USAAF)'s 18th / 161st Tactical Reconnaissance Squadron around 1700 hrs, shortly after the attack.

For weeks after the attack, bodies of victims washed ashore, where they were collected and buried in mass graves at Neustadt in Holstein, Scharbeutz and Timmendorfer Strand.

[37] The prisoners aboard the ships were of at least 30 different nationalities: American, Belarrussian, Belgian, Canadian, Czechoslovakian, Danish, Dutch, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Luxembourger, Norwegian, Polish, Romanian, Russian, Serbian, Spanish, Swedish, Swiss, Ukrainian, and possibly others.