Namespace is out of the hierarchy of the Group owning the template

Hello,

I have a customer who is having this same issue on Saas. His hierarchy is similar to the following

Group

• Group A
  • project A
• Group B (Public)
  • Templates <--- These are the templates he wants to use

But he is getting an error " Namespace is out of the hierarchy of the Group owning the template" when he tries to create them in Subgroup A

To work around this we had him move the Templates directly into the main group's page.

*Group A

*Group B (Public)

*Templates

But according to this merge request it "should" work both ways and was patched in 12.1

We were able to replicate this on our end. Can we take a look and see if something changed or if you are able to replicate it as well?

The customer in question is in zendesk ticket https://gitlab.zendesk.com/agent/tickets/447017