The answer as it turns out is no. The D2 team I was referring to not only didn't go Bot, (It's still in banned status), but it also did not drop down to a lower division either.
Just an FYI so we all know the for sure answer going forward :-)
Yeah. I thought I remembered that happening before with a different team that was banned but I didn't remember what team that was since it wasn't in my league at the time. But know we know.