Branches are stored as files within the .git directory. A single branch is a single file containing the hash to the commit object the branch points to.
So, as you maybe guess, when creating a branch foo/bar this will correspond to a directory with a file. So Git will create a folder foo with a file bar which then points to the commit.
This means when you add another branch foo/baz it will create a file baz and add that to the folder.
Now branch names are case insensitive for case insensitive file systems. This means that FOO/bar and foo/bar are the same. But the actual internal name is taken from the original folder and file name. So when the folder for your bugfix branch category is written in upper case, then the branches are recognized with an upper case BUGFIX.
To fix this, just go into .git/refs/heads and change the folder name to the way you like.