Judge J. Travis Laster said the deal would leave the Bancorp with "100% of an entity with no brand, no banking franchise, no deposit base, no branches, eight current employees and a portfolio of criticized assets" that includes $83.4 million in foreclosed properties.
"This order is an obvious setback to a transaction we believed and continue to believe to be in everyone's best interests," said Alan Levan, chairman and CEO of Fort Lauderdale, Fla.-based BankAtlantic.
Three executives — including Levan and his son — were set to receive more than $10 million in severance and non-compete payments, an amount more than the total book value of the company's equity as of Sept. 30, according to Laster.
BankAtlantic attorneys claimed blockage of the sale would lead to failure, and asked the court "to save plaintiffs from themselves."
Investors and debtholders sued in November to block the sale. Wells Fargo (WFC) and Wilmington Trust, two Bancorp debtholders, filed default notices.
Laster ruled the debt securities prohibit BankAtlantic "from transferring all or substantially all of its assets," and the BB&T sale would constitute an event of default.
Securities holders could then immediately call in BankAtlantic debts, which the court ruled it would not be able to pay.
BB&T agreed to acquire consumer deposits from BankAtlantic and leave nonperforming assets, including $83.4 million of foreclosed properties, with the bank, which would then rename itself. Florida real estate makes up much of BankAtlantic's loan portfolio.
By 2008, the bank's main business was a unit formed to move nonperforming loans off BankAtlantic's balance sheets, according to Laster. BankAtlantic reported a cumulative loss of $533.9 million from 2008 to 2010.
The Bancorp initially sought a wholesale deal for BankAtlantic, Laster said, but Levan soured on potential offers he deemed too low. In July, Levan settled on the plan to split the consumer business and nonperforming assets, a common regulatory technique for troubled banks and thrifts, according to Laster.
Only BB&T met the 10% premium the Bancorp sought, although it would get no cash in return.
BankAtlantic Bancorp previously announced an additional rights offering to shareholders to start Monday, in case the BB&T deal fell apart. Those efforts to raise capital haven't gone well previously, according to court documents.
The last offering to shareholders in June brought in $11 million, well below the $30 million sought by the Bancorp. A capital campaign to raise $75 million in 2009 drew no new investor interest, according to Laster.
Two other lawsuits involving BankAtlantic remain unresolved, including charges from the Securities and Exchange Commission that Levan misled investors on bad loans in its real estate portfolio.
BankAtlantic's stock fell 15% just before market close Monday, and was down another 4.6% to $2.67 in midday trading Tuesday. The bank held $2.8 billion in deposits as of the end of 2010.