As it happens, returned as bad (4)
I believe the answer is:
evil
'bad' is the definition.
(I've seen this before)
'as it happens returned' is the wordplay.
'as it happens' becomes 'live' (as in live television).
'returned' is a reversal indicator.
'live' reversed gives 'EVIL'.
'as' is the link.
(Other definitions for evil that I've seen before include "Morally corrupt" , "Excellent" , "Live kind of badness" , "Wicked - social problem" , "source of harm" .)