diff --git a/compiler/frontend/src/org/jetbrains/kotlin/parsing/KotlinParsing.java b/compiler/frontend/src/org/jetbrains/kotlin/parsing/KotlinParsing.java
index 5277fad8d2b..44a95f10b15 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/parsing/KotlinParsing.java
+++ b/compiler/frontend/src/org/jetbrains/kotlin/parsing/KotlinParsing.java
@@ -1573,7 +1573,7 @@ public class KotlinParsing extends AbstractKotlinParsing {
     private void parseFunctionOrPropertyName(boolean receiverFound, String title, TokenSet nameFollow, boolean nameRequired) {
         if (nameRequired && atSet(nameFollow)) return; // no name
 
-        TokenSet recoverySet = TokenSet.orSet(nameFollow, TokenSet.create(LBRACE, RBRACE));
+        TokenSet recoverySet = TokenSet.orSet(nameFollow, TokenSet.create(LBRACE, RBRACE), TOP_LEVEL_DECLARATION_FIRST);
         if (!receiverFound) {
             expect(IDENTIFIER, "Expecting " + title + " name or receiver type", recoverySet);
         }
diff --git a/compiler/testData/psi/functionReceivers/FunctionsWithFunctionReceiversRecovery.txt b/compiler/testData/psi/functionReceivers/FunctionsWithFunctionReceiversRecovery.txt
index f219d293b3f..d849012826b 100644
--- a/compiler/testData/psi/functionReceivers/FunctionsWithFunctionReceiversRecovery.txt
+++ b/compiler/testData/psi/functionReceivers/FunctionsWithFunctionReceiversRecovery.txt
@@ -294,46 +294,54 @@ JetFile: FunctionsWithFunctionReceiversRecovery.kt
   PsiWhiteSpace('\n')
   FUN
     PsiElement(fun)('fun')
-    PsiWhiteSpace(' ')
     PsiErrorElement:Expecting function name or receiver type
-      PsiElement(fun)('fun')
-    PsiErrorElement:Expecting '('
       <empty list>
   PsiWhiteSpace(' ')
-  MODIFIER_LIST
-    ANNOTATION
-      PsiElement(AT)('@')
-      PsiElement(LBRACKET)('[')
-      ANNOTATION_ENTRY
-        CONSTRUCTOR_CALLEE
-          TYPE_REFERENCE
-            USER_TYPE
-              REFERENCE_EXPRESSION
-                PsiElement(IDENTIFIER)('a')
-      PsiElement(RBRACKET)(']')
-  PsiWhiteSpace(' ')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(IDENTIFIER)('T')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(LT)('<')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(IDENTIFIER)('T')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(GT)('>')
-  PsiErrorElement:Expecting a top level declaration
+  FUN
+    PsiElement(fun)('fun')
+    PsiWhiteSpace(' ')
+    TYPE_REFERENCE
+      ANNOTATION
+        PsiElement(AT)('@')
+        PsiElement(LBRACKET)('[')
+        ANNOTATION_ENTRY
+          CONSTRUCTOR_CALLEE
+            TYPE_REFERENCE
+              USER_TYPE
+                REFERENCE_EXPRESSION
+                  PsiElement(IDENTIFIER)('a')
+        PsiElement(RBRACKET)(']')
+      PsiWhiteSpace(' ')
+      USER_TYPE
+        REFERENCE_EXPRESSION
+          PsiElement(IDENTIFIER)('T')
+        TYPE_ARGUMENT_LIST
+          PsiElement(LT)('<')
+          TYPE_PROJECTION
+            TYPE_REFERENCE
+              USER_TYPE
+                REFERENCE_EXPRESSION
+                  PsiElement(IDENTIFIER)('T')
+          PsiElement(GT)('>')
     PsiElement(DOT)('.')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(LPAR)('(')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(IDENTIFIER)('A')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(LT)('<')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(IDENTIFIER)('B')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(GT)('>')
-  PsiErrorElement:Expecting a top level declaration
-    PsiElement(RPAR)(')')
+    VALUE_PARAMETER_LIST
+      PsiElement(LPAR)('(')
+      VALUE_PARAMETER
+        PsiErrorElement:Parameter name expected
+          <empty list>
+        TYPE_REFERENCE
+          USER_TYPE
+            REFERENCE_EXPRESSION
+              PsiElement(IDENTIFIER)('A')
+            TYPE_ARGUMENT_LIST
+              PsiElement(LT)('<')
+              TYPE_PROJECTION
+                TYPE_REFERENCE
+                  USER_TYPE
+                    REFERENCE_EXPRESSION
+                      PsiElement(IDENTIFIER)('B')
+              PsiElement(GT)('>')
+      PsiElement(RPAR)(')')
   PsiErrorElement:Expecting a top level declaration
     PsiElement(DOT)('.')
   PsiErrorElement:Expecting a top level declaration
diff --git a/compiler/testData/psi/recovery/FunFun.kt b/compiler/testData/psi/recovery/FunFun.kt
new file mode 100644
index 00000000000..f8aa2f9a68e
--- /dev/null
+++ b/compiler/testData/psi/recovery/FunFun.kt
@@ -0,0 +1,5 @@
+fun
+
+fun foo() {
+
+}
\ No newline at end of file
diff --git a/compiler/testData/psi/recovery/FunFun.txt b/compiler/testData/psi/recovery/FunFun.txt
new file mode 100644
index 00000000000..8a8a056d80e
--- /dev/null
+++ b/compiler/testData/psi/recovery/FunFun.txt
@@ -0,0 +1,22 @@
+JetFile: FunFun.kt
+  PACKAGE_DIRECTIVE
+    <empty list>
+  IMPORT_LIST
+    <empty list>
+  FUN
+    PsiElement(fun)('fun')
+    PsiErrorElement:Expecting function name or receiver type
+      <empty list>
+  PsiWhiteSpace('\n\n')
+  FUN
+    PsiElement(fun)('fun')
+    PsiWhiteSpace(' ')
+    PsiElement(IDENTIFIER)('foo')
+    VALUE_PARAMETER_LIST
+      PsiElement(LPAR)('(')
+      PsiElement(RPAR)(')')
+    PsiWhiteSpace(' ')
+    BLOCK
+      PsiElement(LBRACE)('{')
+      PsiWhiteSpace('\n\n')
+      PsiElement(RBRACE)('}')
\ No newline at end of file
diff --git a/compiler/tests/org/jetbrains/kotlin/parsing/ParsingTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/parsing/ParsingTestGenerated.java
index 4baead2d7e9..03e80eae4d6 100644
--- a/compiler/tests/org/jetbrains/kotlin/parsing/ParsingTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/parsing/ParsingTestGenerated.java
@@ -2040,6 +2040,12 @@ public class ParsingTestGenerated extends AbstractParsingTest {
                 doParsingTest(fileName);
             }
 
+            @TestMetadata("FunFun.kt")
+            public void testFunFun() throws Exception {
+                String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/psi/recovery/FunFun.kt");
+                doParsingTest(fileName);
+            }
+
             @TestMetadata("IfKeywordRBrace.kt")
             public void testIfKeywordRBrace() throws Exception {
                 String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/psi/recovery/IfKeywordRBrace.kt");