From the pictured damage it appears that it occurred while the axle nut was being loosened. Furthermore, it appears that a screwdriver or chisel was inserted (hammered-in) between the axle and block ("chain 2 puller" - 5VY-25389-01-00) to prevent rotation while the torque was applied to the nut. That might indicate that the nut was torque welded to the axle by either corrosion, over-tightening or possibly jammed against the shoulder of the axle due to lack of a spacer, washer, or worn/corroded washer. Also, it does not appear that the adjuster was loosened prior to the nut removal.
Inspect the axle threads for galling or cross-threading damage.
New nut and washer (maybe an axle) and block required. If you live in a salt exposed area, you might consider a light application of anti-seize on the axle threads and reduce the tightening torque. Also, lightly grease the axle before insertion to prevent galvanic corrosion between the aluminum axle and steel spacers.