Earlier quoted context omitted.
I wouldn't call resetting passwords an "abundance of caution" in this case. It's very likely that the attackers are able to retrieve passwords when they have the SHA1 hash and the salt (not exactly by decrypting though). Here's a good blog post how and why this is problematic: https://www.troyhunt.com/our-password-hashing-has-no-clothes...
Do they say somewhere that they're only using sha1 though? That's sort of what I meant: if bcrypt or scrypt is used, with an appropriate work factor, the risk should be very minimal. The fact that they're assuming it's not suggests they are using weaker encryption.
Unfortunately, the passwords were hashed with the SHA1 hashing algorithm, which by today’s standards is considered weak
Also, hashing != encryption