I think the threat to sue was posturing, the same way that legal charges are always trumped up to get you to accept a plea.
If you had let them see it through, and they intended to sue you, you could have churned up a horror-inducing PR nightmare of a shitstorm for them.
If someone is really as petty to light cash on fire suing a young person with no assets over baseless claims, let them do it.
Litigation is expensive, you could have qualified for a public defender while they burned company assets, or just have represented yourself.
I say this as someone who isn't a stranger to the courts and judicial system.