A World War II-era ship painted with hundreds of penguins sank in Wellington harbour overnight.
The privately-owned Sealion was previously classified as "non-seaworthy" and had been relying on four pumps to keep it afloat.
Wellington regional harbourmaster Grant Nalder said the ship was not in the best of health.
"Yesterday there was a problem with one of those pumps and it appears water overwhelmed the other pump, so she ended up under the water instead of on top of it."
Nalder said the large timber boat had many small gaps between the planks, which would have let in a fair amount of water.
"It seems the water came in the back of the boat, the stern, near the engine room, and it tilted. Once it started tilting, it just took on more water."
Nalder said the owner was in Nelson and has been informed of the ship's fate.
A caretaker was on board the ship and had alerted Nalder there was a problem with the pumps, but didn't think it was "too bad".