The end for the Laemmles came with a lavish version of Show Boat (1936), a remake of its earlier 1929 part-talkie production, and produced as a high-quality, big-budget film rather than as a B-picture. The new film featured several stars from the Broadway stage version, which began production in late 1935, and unlike the 1929 film was based on the Broadway musical rather than the novel. Carl, Jr.'s spending habits alarmed company stockholders. They would not allow production to start on Show Boat unless the Laemmles obtained a loan. Universal was forced to seek a $750,000 production loan from the Standard Capital Corporation, pledging the Laemmle family's controlling interest in Universal as collateral. It was the first time Universal had borrowed money for a production in its 26-year history. The production went $300,000 over budget; Standard called in the loan, cash-strapped Universal could not pay, Standard foreclosed and seized control of the studio on April 2, 1936.

In what year was Universal's ill-fated film version of Show Boat released?