On February 6, 1986, the Mikhail Lermontov sailed from Sydney on the beginning of a two-week cruise around New Zealand, carrying 372 passengers and a crew of 348, which combined to a total of 743 people. On the evening of February 16, the Lermontov was sailing past Cape Jackson, on the northeastern shore of New Zealand's south island, about 30 miles northwest of Wellington. At 5:37 PM, travelling at 15 knots,Mikhail Lermontov struck rocks about 5.5 metres (18 feet) below the waterline on its port side.
By 8:30 pm, passengers began to abandon ship, with the aid of the Russian crew and local rescue vessels. The passengers were transferred to several ships in the area, including the LPG tanker Tarihiko (Capt. Reedman) and the SeaRail road-rail ferry Arahura (Capt John Brew). As darkness set in MS Mikhail Lermontov listed further to starboard. Within 20 minutes of the last passenger being rescued, the ship had disappeared completely, sinking at approximately 10:27 PM, 4 hours and 50 minutes after running aground. The sinking resulted in only one casualty, 33-year-old crew engineer Pavel Zagladimov, who tragically went down with the ship. The coroner's report lists his official cause of death as 'unknown', as his remains were never found. 11 of those rescued had minor injuries.
MS Mikhail Lermontov rests where it sank, lying on its starboard side in depths reaching up to a maximum of about 38 m. It is popular with Scuba divers and the site is served by local dive shops in Picton andKaikoura. It is also one of the biggest, easily accessible, diveable ship wrecks in the world. The dives range from an easy 12m depth at the top of the wreck, through to deep penetration and decompression dives to depths of 36m. It is possible to enter the wreck, especially in the open public areas accessible from the port side windows near the top of the wreck, although care must be taken and guides familiar with the wreck are highly recommended, especially for enclosed overhead environments and where entanglement hazards may exist. Closed circuit diving is recommended to avoid causing reduced visibility when entering enclosed areas such as restaurants, crew messes, and shopping arcades.