CSOM AddSubFolder no longer working in one of our SharePoint Online tenants > unkown error

Target SharePoint environment

SharePoint Online

What SharePoint development model, framework, SDK or API is this about?

CSOM

Developer environment

None

What browser(s) / client(s) have you tested

• 💥 Internet Explorer
• 💥 Microsoft Edge
• 💥 Google Chrome
• 💥 FireFox
• 💥 Safari
• mobile (iOS/iPadOS)
• mobile (Android)
• not applicable
• other (enter in the "Additional environment details" area below)

Additional environment details

CSOM with PowerShell 5.1.22000.2538

Describe the bug / error

As of today, it is no longer possible to create a folder in SharePoint Online using CSOM and the AddSubFolder() API in one of our tenants. Until yesterday (October 29, 2025), this worked without any problems. I tried it in this tenant in two different site collections, including a newly created list without any customization. When I run the exact same script on a second tenant in our company (also a newly created list without any customization), everything works fine.
As far as I can tell, no changes have been made to the configuration on our side. There are also no further error details.

Is anyone else experiencing this problem?

Steps to reproduce

...
$ParentList.Context.Load($ParentList.RootFolder)
$ParentList.RootFolder.AddSubFolder("test")
$ParentList.Context.Load($ParentList)
$ParentList.Context.ExecuteQuery()

unknown error in one tenant

Expected behavior

The folder "test" should be created without any error.