Forum closed because a member threatened libel action

There’s this chess site I play at. They have forums there too. The other day the Webmaster closed down the Social Chat and the Flame Wars forum. He said it was because a member had threatened libel action due to something that another member had posted about him.

Question:

Did he over react. Could he - the webmaster - have really been faced with a libel suit?

No, he didn’t overreact. Defending yourself against a suit, even an unsuccessful one – even one that doesn’t go to trial - even one that’s dismissed at an early stage of litigation - can run into the thousands of dollars. It’s be great to be able to say, “This forum is important enough that I don’t mind spending a few thousand to beat this garbage!”

But that attitude may not be financially viable.