Last week the Securities and Exchange Commission accused BankAtlantic Bancorp and its chief executive of misleading investors about the value of its loan portfolio in 2007. A trial starting Thursday will test how much the bank’s loans are worth four years later.

A group of investors are seeking to sway a judge in the Delaware Court of Chancery to block BankAtlantic’s proposed sale of $2.1 billion in loans and $3.3 billion in deposits to BB&T. Lawyers for the investors, led by Quinn Emanuel Urquhart & Sullivan, contend that the deal would allow BB&T to unlawfully “cherry-pick” from the Florida bank’s assets, leaving BankAtlantic’s holding company with only a “rag-tag group” of non-performing loans and foreclosed real estate assets to pay debts associated with the investors’ trust-preferred securities.

In November Quinn Emanuel client Hildene Capital Management LLC sued BankAtlantic to block the sale, which is scheduled to close March 1. Wells Fargo Bank (represented by Seward & Kissell) and Wilmington Trust Company (represented by Arent Fox) later joined in the action to contest the deal in their roles as trustees of investors in other trust-preferred securities. The plaintiffs contend that BB&T is required to assume obligations under the trust-preferred securities since the bank is taking on the vast majority of BankAtlantic’s assets.

A key question will be whether the deal does indeed convey substantially all of BankAtlantic’s assets to BB&T. “We think the evidence is overwhelming that it does not do so,” said BankAtlantic counsel Eugene Stearns of Stearns Weaver Miller Weissler Alhadeff & Sitterson. According to a brief filed by Stearns Weaver, the sale will leave BankAtlantic holding assets with a net book value of $623.6 million–far exceeding the $333 million in outstanding trust-preferred securities. But in a reply brief filed in December, Hildene’s lawyers at Quinn Emanuel argued that the deal envisioned by BankAtlantic and BB&T isn’t the deal they bargained for when they bought BankAtlantic trust preferred securities.

Delaware Vice Chancellor Travis Laster paved the way for the three-day trial when he denied BankAtlantic’s motion to dismiss on Jan. 3. In a bench ruling, Laster concluded that it needed to be determined at trial whether the deal would leave BankAtlantic with sufficient assets to make investors whole, and he noted that the issue was potentially irrelevant given covenants the bondholders obtained regarding asset sales. As to the $623.6 million book-value of the assets, Laster said “there are likely serious disputes over the sufficiency of these assets and, as I said, ultimately, about the nature of the covenant.”

“Our clients are getting left behind with little hope of getting paid from what will be left of BankAtlantic after it sells substantially all of its assets to BB&T,” Quinn Emanuel’s Jonathan Pickhardt said in an e-mailed statement. “The fact that BankAtlantic will now also now have to pay for its defense of the SEC charges and whatever penalties are imposed out of those same assets only makes the situation worse.”

Indeed, the trial is set to begin just days after the SEC sued BankAtlantic and CEO Alan Levan for securities fraud. The SEC accuses them of misleading investors about the deteriorating state of loan assets in 2007. Stearns, who is also defending the bank in the SEC suit, called the agency’s complaint “utterly ridiculous”; Levan said in a lengthy statement issued last week that the bank “worked tirelessly to manage our criticized assets and our business and our activities have been appropriately and correctly reported.”

The SEC’s case couldn’t have been filed at a more awkward time for BankAtlantic. While agency’s claims don’t overlap with those in the Delaware suits, Stearns said he was sure the plaintiffs would reference the SEC charges at trial. “And we’ll deal with it as we can,” he said.

If Stearns does manage to fend off the Delaware and SEC suits, he’ll have amassed quite a record defending his beleaguered client. Last April Stearns convinced a federal judge in Miami to throw out a rare securities class action jury verdict that plaintiffs lawyers at Labaton Sucharow won against BankAtlantic over its 2007 disclosures.