Not sure if specifically related to the update per se, but the timing fits as to when it seems to have stopped sorting.
Using chromium version info below, on arch linux with gnome 40 desktop
Version 90.0.4430.93 (Official Build) Arch Linux (64-bit)
All of my bookmarks are in subfolders off the main bookbar in chrome, selecting/deselecting the ignore bookmarks bar option and trying both ways makes no difference.
Also selecting and deselecting automatic sorting and clicking the sort button with both options doesn't work either.