[Dovecot] Folders within folders?

[ed beers]

I'm trying to migrate my emails from an existing server (University of 
Washington IMAP toolkit) to dovecot.  My clients are all using Thunderbird.

I'm moving to a new Ubuntu based server (old one was Centos4) and 
selected dovecot solely because it was the default option.  I'm not 
committed to it if it isn't the right tool for my application.

My existing server allows hierarchical folders and these are used to 
organize 20 years worth of carefully sorted emails. 

I can create a new folders on the dovecot server but Thunderbird 
doesn't  allow me to create new sub-folders within them.  I think T-bird 
is configured OK since this works on the old server.

Is this a dovecot limitation or have I configured it incorrectly?