ATLAS Ship of the Damned is a particularly nasty challenge in this game, and using anything short of high-end gear to take one on will end in your inevitable death. Good news, however, is that you can sink a Ship of the Damned, and here we're going to give you some pointers on doing so.
Upon the introduction of ATLAS Ghost Ships, these unsightly beasts were vastly overpowered. In fact, about 95% of player-owned ships were destroyed when Ships of the Damned started spawning across the world, which made for a startling period in the history of ATLAS.
That said, Ghost Ships have since been slightly nerfed, and they're now most definitely killable should you come across one with decent enough equipment. These AI-controlled vessels will require at least a fully-manned Brigantine-class ship to take down, so be sure you're ready for endgame challenges before attacking a Ship of the Damned.
Your best bet for taking down one such vessel is to prepare overwhelming firepower and destroying it at range, because in close-quarters-combat, a Ghost Ship will try and ram your ship for massive damage.
Destroying a Ship of the Damned will net you slaves and various loot, including gold and valuable upgrade blueprints, so the challenge is well-worth the trouble. Provided, of course, than you can actually persevere.