diff --git a/compiler/backend/src/org/jetbrains/kotlin/codegen/ClosureCodegen.java b/compiler/backend/src/org/jetbrains/kotlin/codegen/ClosureCodegen.java
index 22291f863ac..ec0f0af4d3e 100644
--- a/compiler/backend/src/org/jetbrains/kotlin/codegen/ClosureCodegen.java
+++ b/compiler/backend/src/org/jetbrains/kotlin/codegen/ClosureCodegen.java
@@ -205,6 +205,10 @@ public class ClosureCodegen extends MemberCodegen<KtElement> {
             generateFunctionReferenceMethods(functionReferenceTarget);
         }
 
+        functionCodegen.generateDefaultIfNeeded(
+                context.intoFunction(funDescriptor), funDescriptor, context.getContextKind(), DefaultParameterValueLoader.DEFAULT, null
+        );
+
         this.constructor = generateConstructor();
 
         if (isConst(closure)) {
@@ -212,10 +216,6 @@ public class ClosureCodegen extends MemberCodegen<KtElement> {
         }
 
         genClosureFields(closure, v, typeMapper);
-
-        functionCodegen.generateDefaultIfNeeded(
-                context.intoFunction(funDescriptor), funDescriptor, context.getContextKind(), DefaultParameterValueLoader.DEFAULT, null
-        );
     }
 
     @Override
diff --git a/compiler/testData/codegen/box/closures/kt5589.kt b/compiler/testData/codegen/box/closures/kt5589.kt
new file mode 100644
index 00000000000..3b3a27d91ca
--- /dev/null
+++ b/compiler/testData/codegen/box/closures/kt5589.kt
@@ -0,0 +1,5 @@
+fun box(): String {
+    val x = "OK"
+    fun bar(y: String = x): String = y
+    return bar()
+}
\ No newline at end of file
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxCodegenTestGenerated.java
index c414ace497d..09252ce51f0 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/generated/BlackBoxCodegenTestGenerated.java
@@ -1846,6 +1846,12 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
             doTest(fileName);
         }
 
+        @TestMetadata("kt5589.kt")
+        public void testKt5589() throws Exception {
+            String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/box/closures/kt5589.kt");
+            doTest(fileName);
+        }
+
         @TestMetadata("localClassFunClosure.kt")
         public void testLocalClassFunClosure() throws Exception {
             String fileName = JetTestUtils.navigationMetadata("compiler/testData/codegen/box/closures/localClassFunClosure.kt");