diff --git a/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/moveConflictUtils.kt b/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/moveConflictUtils.kt
index 8d602dbc9c8..23322dbac3c 100644
--- a/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/moveConflictUtils.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/moveConflictUtils.kt
@@ -733,10 +733,11 @@ class MoveConflictChecker(
 
             val targetModule = moveTarget.getTargetModule(project) ?: return null
             val targetPackage = moveTarget.getTargetPackage() ?: return null
+            val targetDir = moveTarget.targetFile?.takeIf { it.isDirectory } ?: moveTarget.targetFile?.parent
 
             val className = classToMove.nameAsSafeName.asString()
 
-            if (otherHierarchyMembers.none { it.residesIn(targetModule, targetPackage) }) {
+            if (otherHierarchyMembers.none { it.residesIn(targetModule, targetPackage, targetDir) }) {
                 val hierarchyMembers = buildList { add(classToMove); addAll(otherHierarchyMembers) }.toNamesList()
                 return KotlinBundle.message(
                     "text.sealed.broken.hierarchy.none.in.target",
@@ -749,9 +750,10 @@ class MoveConflictChecker(
 
             val moduleToMoveFrom = classToMove.module ?: return null
             val packageToMoveFrom = classToMoveDesc.findPsiPackage(moduleToMoveFrom) ?: return null
+            val directoryToMoveFrom = classToMove.containingKtFile.containingDirectory?.virtualFile
 
             val membersRemainingInOriginalPackage =
-                otherHierarchyMembers.filter { it.residesIn(moduleToMoveFrom, packageToMoveFrom) && !isToBeMoved(it) }.toList()
+                otherHierarchyMembers.filter { it.residesIn(moduleToMoveFrom, packageToMoveFrom, directoryToMoveFrom) && !isToBeMoved(it) }.toList()
 
             if ((targetPackage != packageToMoveFrom || targetModule != moduleToMoveFrom) &&
                 membersRemainingInOriginalPackage.any { !isToBeMoved(it) }
@@ -765,10 +767,11 @@ class MoveConflictChecker(
             return null
         }
 
-        private fun KtClassOrObject.residesIn(targetModule: Module, targetPackage: PsiPackage): Boolean {
+        private fun KtClassOrObject.residesIn(targetModule: Module, targetPackage: PsiPackage, targetDir: VirtualFile?): Boolean {
             val myModule = module ?: return false
             val myPackage = descriptor?.findPsiPackage(myModule)
-            return myPackage == targetPackage && myModule == targetModule
+            val myDirectory = containingKtFile.containingDirectory?.virtualFile
+            return myPackage == targetPackage && myModule == targetModule && myDirectory == targetDir
         }
 
         private fun DeclarationDescriptor.findPsiPackage(module: Module): PsiPackage? {
diff --git a/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/ui/MoveKotlinNestedClassesToUpperLevelModel.kt b/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/ui/MoveKotlinNestedClassesToUpperLevelModel.kt
index 7562e42ba37..0ea1d2b24e6 100644
--- a/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/ui/MoveKotlinNestedClassesToUpperLevelModel.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/refactoring/move/moveDeclarations/ui/MoveKotlinNestedClassesToUpperLevelModel.kt
@@ -177,7 +177,6 @@ internal abstract class MoveKotlinNestedClassesToUpperLevelModel(
             val target = KotlinMoveTargetForDeferredFile(
                 targetPackageFqName,
                 target,
-                targetFile = null
             ) { createKotlinFile(targetFileName, target, targetPackageFqName.asString()) }
 
             target to MoveRefactoringDestination.FILE
diff --git a/idea/testData/refactoring/moveMultiModule/moveSealedCheckTargetPackageHasNoMembers/after/A/src/another/.gitignore b/idea/testData/refactoring/moveMultiModule/moveSealedCheckTargetPackageHasNoMembers/after/A/src/another/.gitignore
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/idea/testData/refactoring/moveMultiModule/moveSealedCheckTargetPackageHasNoMembers/before/A/src/another/.gitignore b/idea/testData/refactoring/moveMultiModule/moveSealedCheckTargetPackageHasNoMembers/before/A/src/another/.gitignore
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/idea/testData/refactoring/moveMultiModule/moveToUnrelatedModuleConflict/after/B/src/target/.gitignore b/idea/testData/refactoring/moveMultiModule/moveToUnrelatedModuleConflict/after/B/src/target/.gitignore
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/idea/testData/refactoring/moveMultiModule/moveToUnrelatedModuleConflict/before/B/src/target/.gitignore b/idea/testData/refactoring/moveMultiModule/moveToUnrelatedModuleConflict/before/B/src/target/.gitignore
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/idea/tests/org/jetbrains/kotlin/idea/refactoring/move/AbstractMoveTest.kt b/idea/tests/org/jetbrains/kotlin/idea/refactoring/move/AbstractMoveTest.kt
index 7b1295df63d..8c16374171c 100644
--- a/idea/tests/org/jetbrains/kotlin/idea/refactoring/move/AbstractMoveTest.kt
+++ b/idea/tests/org/jetbrains/kotlin/idea/refactoring/move/AbstractMoveTest.kt
@@ -226,13 +226,7 @@ enum class MoveAction : AbstractMultifileRefactoringTest.RefactoringAction {
                     AutocreatingSingleSourceRootMoveDestination(packageWrapper, rootDir.findFileByRelativePath(it)!!)
                 } ?: MultipleRootsMoveDestination(packageWrapper)
                 val targetDir = moveDestination.getTargetIfExists(mainFile)
-                val targetVirtualFile = if (targetSourceRootPath != null) {
-                    rootDir.findFileByRelativePath(targetSourceRootPath)!!
-                } else {
-                    targetDir?.virtualFile
-                }
-
-                KotlinMoveTargetForDeferredFile(FqName(packageName), targetDir, targetVirtualFile) {
+                KotlinMoveTargetForDeferredFile(FqName(packageName), targetDir) {
                     createKotlinFile(guessNewFileName(elementsToMove)!!, moveDestination.getTargetDirectory(mainFile))
                 }
             } ?: config.getString("targetFile").let { filePath ->