diff --git a/idea/src/org/jetbrains/jet/plugin/codeInsight/OverrideImplementMethodsHandler.java b/idea/src/org/jetbrains/jet/plugin/codeInsight/OverrideImplementMethodsHandler.java
index 31534a94552..781abd15869 100644
--- a/idea/src/org/jetbrains/jet/plugin/codeInsight/OverrideImplementMethodsHandler.java
+++ b/idea/src/org/jetbrains/jet/plugin/codeInsight/OverrideImplementMethodsHandler.java
@@ -87,11 +87,12 @@ public abstract class OverrideImplementMethodsHandler implements LanguageCodeIns
             afterAnchor = added;
             elementsToCompact.add((JetElement) added);
         }
+        ReferenceToClassesShortening.compactReferenceToClasses(elementsToCompact);
+
         if (!body.isPhysical()) {
             classOrObject.add(JetPsiFactory.createWhiteSpace(project));
             classOrObject.add(body);
         }
-        ReferenceToClassesShortening.compactReferenceToClasses(elementsToCompact);
     }
 
     @Nullable
diff --git a/idea/testData/codeInsight/overrideImplement/emptyClassBodyFunctionMethod.kt b/idea/testData/codeInsight/overrideImplement/emptyClassBodyFunctionMethod.kt
new file mode 100644
index 00000000000..207375dd207
--- /dev/null
+++ b/idea/testData/codeInsight/overrideImplement/emptyClassBodyFunctionMethod.kt
@@ -0,0 +1,6 @@
+// From KT-1254
+trait T {
+    fun Foo() : (String) -> Unit
+}
+
+class C : <caret>T
\ No newline at end of file
diff --git a/idea/testData/codeInsight/overrideImplement/emptyClassBodyFunctionMethod.kt.after b/idea/testData/codeInsight/overrideImplement/emptyClassBodyFunctionMethod.kt.after
new file mode 100644
index 00000000000..a45b0a7ee27
--- /dev/null
+++ b/idea/testData/codeInsight/overrideImplement/emptyClassBodyFunctionMethod.kt.after
@@ -0,0 +1,10 @@
+// From KT-1254
+trait T {
+    fun Foo() : (String) -> Unit
+}
+
+class C : T {
+    override fun Foo(): (String) -> Unit {
+        throw UnsupportedOperationException()
+    }
+}
\ No newline at end of file
diff --git a/idea/tests/org/jetbrains/jet/plugin/codeInsight/OverrideImplementTest.java b/idea/tests/org/jetbrains/jet/plugin/codeInsight/OverrideImplementTest.java
index 6f649a1b5c3..b7fe069ca3d 100644
--- a/idea/tests/org/jetbrains/jet/plugin/codeInsight/OverrideImplementTest.java
+++ b/idea/tests/org/jetbrains/jet/plugin/codeInsight/OverrideImplementTest.java
@@ -54,6 +54,10 @@ public class OverrideImplementTest extends LightCodeInsightFixtureTestCase {
         myFixture.setTestDataPath(PluginTestCaseBase.getTestDataPathBase() + "/codeInsight/overrideImplement");
     }
 
+    public void testEmptyClassBodyFunctionMethod() {
+        doImplementFileTest();
+    }
+
     public void testFunctionMethod() {
         doImplementFileTest();
     }