To descibe a situation, sombody or something which is so hideously bad it is beyond belief. This phrase is often backed by an arm gesture (a little like limp handed punch) to allow the audience to realise the severity of the horendesness before them.
Person A: "Did you see what 'Laura' was wearing the other day?"
Person B: "Yeah i did it was Fucking Bad" (completed with limp handed punch so that person A realises just how bad the outfit was.
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