As they were previously running client jobs, I can see an attractive side to building up the team experience on new tech using their in-house project rather than on client projects.

Put otherwise, in their previous line of business, it matters to be current with regards to state-of-the-art application development. Where's the harm in experimenting with your 'on the side' app?

It might be more an exercise in keeping current on new technologies rather than fixing a broken codebase. I have friends who keep rebuilding the same hobby site as different technologies pop up. It sounds as if they treated it as a side project previously.

With all the SDKs and APIs these days, I don't think a rewrite is what it used to be.