Review for Flat Folder Tree by Gyrocode.com
Rated 5 out of 5 stars
I am surprised this hasn't been mentioned before. There is much simpler solution available that no longer requires add-on.
See this post for more details and screenshots:
https://www.gyrocode.com/articles/how-to-hide-gmail-folder-in-mozilla-thunderbird-using-imap/
To create your own collections, you must have a Mozilla Add-ons account.