Using an alert to execute java script to BYPASS jobs contained within an entire SUBAPPL, we see they remain in a MANHOLD state when the predecessor job completes/fails.
Java Script example: execCommand('SUBAPPL(TEST)','MY_APPLICATION.0','ACTION BYPASS)');
if the predecessor job goes overdue, execute alert and bypass subappl jobs.
Release : 12.2
If the jobs contained within the SUBAPPL are being submitted ON HOLD, the jobs will not get bypassed. You cannot BYPASS jobs that are in MANHOLD state.
You'll need to de-select the Submit ON Hold option on the General tab of each of these jobs in the SUBAPPL for this to work as you are expecting.
Also note that the predecessor job must complete or fail in order for the bypass to take effect.