I found a workaround for this bug.

After reading the above comments about utf-8 characters, I looked at the
groups I had while shoeing  all offline buddies and found a couple
groups that had special or weird characters in them.  I moved all my
buddies out of them and then deleted the groups.  The problem appears to
have gone away.

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Error Reading blist.xml with utf-8 characters in group-descriptions
https://bugs.launchpad.net/bugs/260843
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