diff --git a/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/callableBuilder/typeUtils.kt b/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/callableBuilder/typeUtils.kt
index f212d60c8cc..5e88306649d 100644
--- a/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/callableBuilder/typeUtils.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/callableBuilder/typeUtils.kt
@@ -56,7 +56,7 @@ private fun DeclarationDescriptor.render(
 }
 
 private fun JetType.render(typeParameterNameMap: Map<TypeParameterDescriptor, String>, fq: Boolean): String {
-    val arguments = getArguments().map { it.getType().render(typeParameterNameMap, fq) }
+    val arguments = getArguments().map { if (it.isStarProjection) "*" else it.getType().render(typeParameterNameMap, fq) }
     val typeString = getConstructor().getDeclarationDescriptor()!!.render(typeParameterNameMap, fq)
     val typeArgumentString = if (arguments.isNotEmpty()) arguments.joinToString(", ", "<", ">") else ""
     val nullifier = if (isMarkedNullable()) "?" else ""
@@ -73,20 +73,28 @@ private fun getTypeParameterNamesNotInScope(typeParameters: Collection<TypeParam
     }
 }
 
+fun JetType.containsStarProjections(): Boolean = arguments.any { it.isStarProjection || it.type.containsStarProjections() }
+
 fun JetType.getTypeParameters(): Set<TypeParameterDescriptor> {
+    val visitedTypes = HashSet<JetType>()
     val typeParameters = LinkedHashSet<TypeParameterDescriptor>()
-    val arguments = getArguments()
-    if (arguments.isEmpty()) {
-        val descriptor = getConstructor().getDeclarationDescriptor()
-        if (descriptor is TypeParameterDescriptor) {
-            typeParameters.add(descriptor)
-        }
-    }
-    else {
-        arguments.flatMapTo(typeParameters) { projection ->
-            projection.getType().getTypeParameters()
+
+    fun traverseTypes(type: JetType) {
+        if (!visitedTypes.add(type)) return
+
+        val arguments = type.arguments
+        if (arguments.isEmpty()) {
+            val descriptor = type.constructor.declarationDescriptor
+            if (descriptor is TypeParameterDescriptor) {
+                typeParameters.add(descriptor)
+            }
+            return
         }
+
+        arguments.forEach { traverseTypes(it.type) }
     }
+
+    traverseTypes(this)
     return typeParameters
 }
 
diff --git a/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/createClass/createClassUtils.kt b/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/createClass/createClassUtils.kt
index c5daf3a671b..221f630d05b 100644
--- a/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/createClass/createClassUtils.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/quickfix/createFromUsage/createClass/createClassUtils.kt
@@ -28,6 +28,7 @@ import org.jetbrains.kotlin.idea.codeInsight.DescriptorToSourceUtilsIde
 import org.jetbrains.kotlin.idea.core.refactoring.canRefactor
 import org.jetbrains.kotlin.idea.quickfix.DelegatingIntentionAction
 import org.jetbrains.kotlin.idea.quickfix.createFromUsage.callableBuilder.TypeInfo
+import org.jetbrains.kotlin.idea.quickfix.createFromUsage.callableBuilder.containsStarProjections
 import org.jetbrains.kotlin.idea.quickfix.createFromUsage.callableBuilder.guessTypes
 import org.jetbrains.kotlin.idea.quickfix.createFromUsage.callableBuilder.noSubstitutions
 import org.jetbrains.kotlin.psi.Call
@@ -39,9 +40,7 @@ import org.jetbrains.kotlin.resolve.DescriptorToSourceUtils
 import org.jetbrains.kotlin.resolve.DescriptorUtils
 import org.jetbrains.kotlin.resolve.scopes.receivers.Qualifier
 import org.jetbrains.kotlin.resolve.scopes.receivers.ReceiverValue
-import org.jetbrains.kotlin.types.TypeUtils
 import org.jetbrains.kotlin.types.Variance
-import org.jetbrains.kotlin.types.checker.JetTypeChecker
 import org.jetbrains.kotlin.descriptors.ClassKind as ClassDescriptorKind
 
 private fun String.checkClassName(): Boolean = isNotEmpty() && Character.isUpperCase(first())
@@ -93,7 +92,7 @@ private fun JetExpression.getInheritableTypeInfo(
     val type = types.first()
     val descriptor = type.getConstructor().getDeclarationDescriptor() ?: return TypeInfo.Empty to { classKind -> false }
 
-    val canHaveSubtypes = TypeUtils.canHaveSubtypes(JetTypeChecker.DEFAULT, type)
+    val canHaveSubtypes = !(type.constructor.isFinal || type.containsStarProjections())
     val isEnum = DescriptorUtils.isEnumClass(descriptor)
 
     if (!(canHaveSubtypes || isEnum)
diff --git a/idea/testData/quickfix/createFromUsage/createClass/referenceExpression/recursiveBound.kt b/idea/testData/quickfix/createFromUsage/createClass/referenceExpression/recursiveBound.kt
new file mode 100644
index 00000000000..104b2f25906
--- /dev/null
+++ b/idea/testData/quickfix/createFromUsage/createClass/referenceExpression/recursiveBound.kt
@@ -0,0 +1,11 @@
+// "Create object 'Foo'" "false"
+// ACTION: Create local variable 'Foo'
+// ACTION: Create parameter 'Foo'
+// ACTION: Create property 'Foo'
+// ACTION: Split property declaration
+// ERROR: Unresolved reference: Foo
+open class Cyclic<E : Cyclic<E>>
+
+fun test() {
+    val c : Cyclic<*> = <caret>Foo
+}
\ No newline at end of file
diff --git a/idea/testData/quickfix/createFromUsage/createVariable/parameter/recursiveBound.kt b/idea/testData/quickfix/createFromUsage/createVariable/parameter/recursiveBound.kt
new file mode 100644
index 00000000000..97fe1a5169c
--- /dev/null
+++ b/idea/testData/quickfix/createFromUsage/createVariable/parameter/recursiveBound.kt
@@ -0,0 +1,6 @@
+// "Create parameter 'foo'" "true"
+class Cyclic<E : Cyclic<E>>
+
+fun test() {
+    val c : Cyclic<*> = <caret>foo
+}
\ No newline at end of file
diff --git a/idea/testData/quickfix/createFromUsage/createVariable/parameter/recursiveBound.kt.after b/idea/testData/quickfix/createFromUsage/createVariable/parameter/recursiveBound.kt.after
new file mode 100644
index 00000000000..e8994a09bc8
--- /dev/null
+++ b/idea/testData/quickfix/createFromUsage/createVariable/parameter/recursiveBound.kt.after
@@ -0,0 +1,6 @@
+// "Create parameter 'foo'" "true"
+class Cyclic<E : Cyclic<E>>
+
+fun test(foo: Cyclic<*>) {
+    val c : Cyclic<*> = foo
+}
\ No newline at end of file
diff --git a/idea/testData/quickfix/createFromUsage/createVariable/property/recursiveBound.kt b/idea/testData/quickfix/createFromUsage/createVariable/property/recursiveBound.kt
new file mode 100644
index 00000000000..4c9f67493ea
--- /dev/null
+++ b/idea/testData/quickfix/createFromUsage/createVariable/property/recursiveBound.kt
@@ -0,0 +1,7 @@
+// "Create property 'foo'" "true"
+// ERROR: Property must be initialized
+class Cyclic<E : Cyclic<E>>
+
+fun test() {
+    val c : Cyclic<*> = <caret>foo
+}
\ No newline at end of file
diff --git a/idea/testData/quickfix/createFromUsage/createVariable/property/recursiveBound.kt.after b/idea/testData/quickfix/createFromUsage/createVariable/property/recursiveBound.kt.after
new file mode 100644
index 00000000000..b129959307c
--- /dev/null
+++ b/idea/testData/quickfix/createFromUsage/createVariable/property/recursiveBound.kt.after
@@ -0,0 +1,9 @@
+// "Create property 'foo'" "true"
+// ERROR: Property must be initialized
+class Cyclic<E : Cyclic<E>>
+
+val foo: Cyclic<*>
+
+fun test() {
+    val c : Cyclic<*> = foo
+}
\ No newline at end of file
diff --git a/idea/tests/org/jetbrains/kotlin/idea/quickfix/QuickFixTestGenerated.java b/idea/tests/org/jetbrains/kotlin/idea/quickfix/QuickFixTestGenerated.java
index 3cc14a50109..e087b5a32a3 100644
--- a/idea/tests/org/jetbrains/kotlin/idea/quickfix/QuickFixTestGenerated.java
+++ b/idea/tests/org/jetbrains/kotlin/idea/quickfix/QuickFixTestGenerated.java
@@ -1304,6 +1304,12 @@ public class QuickFixTestGenerated extends AbstractQuickFixTest {
                     doTest(fileName);
                 }
 
+                @TestMetadata("recursiveBound.kt")
+                public void testRecursiveBound() throws Exception {
+                    String fileName = JetTestUtils.navigationMetadata("idea/testData/quickfix/createFromUsage/createClass/referenceExpression/recursiveBound.kt");
+                    doTest(fileName);
+                }
+
                 @TestMetadata("traitByQualifier.kt")
                 public void testTraitByQualifier() throws Exception {
                     String fileName = JetTestUtils.navigationMetadata("idea/testData/quickfix/createFromUsage/createClass/referenceExpression/traitByQualifier.kt");
@@ -2666,6 +2672,12 @@ public class QuickFixTestGenerated extends AbstractQuickFixTest {
                     doTest(fileName);
                 }
 
+                @TestMetadata("recursiveBound.kt")
+                public void testRecursiveBound() throws Exception {
+                    String fileName = JetTestUtils.navigationMetadata("idea/testData/quickfix/createFromUsage/createVariable/parameter/recursiveBound.kt");
+                    doTest(fileName);
+                }
+
                 @TestMetadata("withPackageName.kt")
                 public void testWithPackageName() throws Exception {
                     String fileName = JetTestUtils.navigationMetadata("idea/testData/quickfix/createFromUsage/createVariable/parameter/withPackageName.kt");
@@ -2747,6 +2759,12 @@ public class QuickFixTestGenerated extends AbstractQuickFixTest {
                     doTest(fileName);
                 }
 
+                @TestMetadata("recursiveBound.kt")
+                public void testRecursiveBound() throws Exception {
+                    String fileName = JetTestUtils.navigationMetadata("idea/testData/quickfix/createFromUsage/createVariable/property/recursiveBound.kt");
+                    doTest(fileName);
+                }
+
                 @TestMetadata("refInImport.kt")
                 public void testRefInImport() throws Exception {
                     String fileName = JetTestUtils.navigationMetadata("idea/testData/quickfix/createFromUsage/createVariable/property/refInImport.kt");