"Badly" is an adverb, which means that it modifies an adjective or a verb. "The company was badly managed." In this case, the adverb "badly" is modifying the verb "managed". "The badly painted car stopped at the light." For this one, "badly" modifies the adjective "painted". "Bad" is just an adjective to describe a noun, and can also be used a noun when talking about the concept of "good" and "bad". "Ultraman came to defeat the bad guys." "The factory owner had done a lot of bad in his life."