diff --git a/java/java-impl/src/com/intellij/codeInsight/intention/ReplaceConstructorWithFactoryAction.java b/java/java-impl/src/com/intellij/codeInsight/intention/ReplaceConstructorWithFactoryAction.java
index 40a204e6c92f..22a804507088 100644
--- a/java/java-impl/src/com/intellij/codeInsight/intention/ReplaceConstructorWithFactoryAction.java
+++ b/java/java-impl/src/com/intellij/codeInsight/intention/ReplaceConstructorWithFactoryAction.java
@@ -238,18 +238,14 @@ public class ReplaceConstructorWithFactoryAction implements ModCommandAction {
     PsiClass containingClass = ClassUtils.getContainingClass(element);
     if (!isSuitableClass(containingClass)) return null;
     PsiElement lBrace = containingClass.getLBrace();
-    if (lBrace != null && element.getTextRange().getStartOffset() >= lBrace.getTextRange().getStartOffset()) return null;
+    if (lBrace == null || element.getTextRange().getStartOffset() >= lBrace.getTextRange().getStartOffset()) return null;
     if (containingClass.getConstructors().length > 0) return null;
     return containingClass;
   }
 
   private static boolean isSuitableClass(PsiClass containingClass) {
-    return containingClass != null &&
-           PsiTreeUtil.getParentOfType(containingClass, PsiImplicitClass.class, false) == null &&
-           !containingClass.isInterface() &&
-           !containingClass.isEnum() &&
-           !containingClass.isRecord() &&
-           !containingClass.hasModifierProperty(PsiModifier.ABSTRACT) &&
+    return containingClass != null && !containingClass.isInterface() && !containingClass.isEnum() && !containingClass.isRecord() &&
+           !(containingClass instanceof PsiImplicitClass) && !containingClass.hasModifierProperty(PsiModifier.ABSTRACT) && 
            containingClass.getQualifiedName() != null;
   }
 }
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingStringTemplates/StringTemplatesJava22.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingStringTemplates/StringTemplatesJava22.java
new file mode 100644
index 000000000000..682b1ff1dd2e
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingStringTemplates/StringTemplatesJava22.java
@@ -0,0 +1,123 @@
+class X {
+
+  void processorMissing() {
+    System.out.println(<error descr="Processor missing from string template expression">"""
+      \{1}
+      """</error>);
+    <error descr="Processor missing from string template expression">"\{}"</error>;
+    System.out.println(<error descr="Cannot resolve symbol 'NOPE'">NOPE</error>."\{false}");
+    System.out.println(<error descr="Cannot resolve symbol 'RAW'">RAW</error>."\{false}");
+  }
+
+  void correct(int i) {
+    System.out.println(STR."the value is \{i}");
+    String s = STR."";
+    StringTemplate st = StringTemplate.RAW."""
+      """;
+  }
+
+  void wrongType(String foo) {
+    <error descr="Incompatible types. Found: 'java.lang.StringTemplate', required: 'java.lang.String'">String s = StringTemplate.RAW."""
+      this: \{foo}
+      """;</error>
+
+    var x = (java.io.Serializable & StringTemplate.Processor<String, RuntimeException>)null;
+    <error descr="Incompatible types. Found: 'java.lang.String', required: 'java.util.ArrayList'">java.util.ArrayList v = x."asdf";</error>
+    String t = x."reticulation";
+  }
+
+  String unresolvedValues() {
+    return STR."\{<error descr="Cannot resolve symbol 'logic'">logic</error>} \{<error descr="Cannot resolve symbol 'proportion'">proportion</error>}";
+  }
+
+  interface MyProcessor extends StringTemplate.Processor {}
+
+  String raw(StringTemplate.Processor processor, MyProcessor myProcessor) {
+    System.out.println(<error descr="Raw processor type is not allowed: MyProcessor">myProcessor</error>."");
+    return <error descr="Raw processor type is not allowed: Processor">processor</error>."\{}\{}\{}\{}\{}\{}";
+    var z = (java.io.Serializable & StringTemplate.Processor)myProcessor;
+    System.out.println(<error descr="Raw processor type is not allowed: Serializable & Processor">z</error>."");
+  }
+
+  void nested() {
+    System.out.println(STR."\{STR."\{STR."\{STR."\{STR."\{STR."\{STR.""}"}"}"}"}"}");
+  }
+
+  String badEscape() {
+    System.out.println(STR."b<error descr="Illegal escape character in string literal">\a</error>d \{} esc<error descr="Illegal escape character in string literal">\a</error>pe 1");
+    System.out.println(STR. """
+      b<error descr="Illegal escape character in string literal">\a</error>d \{} esc<error descr="Illegal escape character in string literal">\a</error>pe 2
+      """);
+    System.out.println(STR."\{<error descr="Line end not allowed in string literals">}unclosed);</error>
+    return STR."\{} <error descr="Illegal Unicode escape sequence">\u</error>X";
+  }
+
+  static class Covariant implements StringTemplate.Processor<Object, RuntimeException> {
+    @Override
+    public Integer process(StringTemplate stringTemplate) {
+      return 123;
+    }
+  }
+
+  public static void testCovariant() {
+    Covariant proc = new Covariant();
+    // As of Java 21, covariant processors are not supported
+    <error descr="Incompatible types. Found: 'java.lang.Object', required: 'java.lang.Integer'">Integer i = proc."hello";</error>
+  }
+
+  static class CovariantException implements StringTemplate.Processor<Integer, Exception> {
+    @Override
+    public Integer process(StringTemplate stringTemplate) throws Ex {
+      return 123;
+    }
+  }
+  
+  class Ex extends Exception {}
+  class Ex2 extends Exception {}
+  
+  public static void testHandle(StringTemplate.Processor<Integer, Ex> proc) {
+    try {
+      Object x = proc."hello";
+    }
+    catch (Ex ex) {} 
+  }
+
+  public static void testExceptionInFragments(StringTemplate.Processor<Integer, Ex> proc,
+                                              StringTemplate.Processor<Integer, Ex2> proc2) {
+    try {
+      proc."hell\{<error descr="Unhandled exception: X.Ex2">proc2."xyz"</error>}o";
+    }
+    catch (Ex ex) {} 
+  }
+
+  public static void testCovariantException() {
+    CovariantException proc = new CovariantException();
+    // As of Java 21, covariant processors are not supported
+    Integer i = <error descr="Unhandled exception: java.lang.Exception">proc."hello";</error>
+
+    try {
+      Integer i2 = <error descr="Unhandled exception: java.lang.Exception">proc."hello";</error>
+    }
+    catch (Ex ex) {}
+  }
+
+  public static void testCapturedWilcard(StringTemplate.Processor<?, ?> str) {
+    Object s = <error descr="Unhandled exception: java.lang.Throwable">str."";</error>
+  }
+
+  void testCapturedWildcard2() {
+    StringTemplate.Processor<StringTemplate.Processor<?, ? extends Exception>, RuntimeException> processor = null;
+    Object o = <error descr="Unhandled exception: java.lang.Exception">processor."""
+                """."""
+                """;</error>
+  }
+  
+  public static void noNewlineAfterTextBlockOpeningQuotes() {
+    System.out.println(STR.<error descr="Illegal text block start: missing new line after opening quotes">"""</error>\{}""");
+  }
+  
+  public static void voidExpression() {
+    String a = STR."\{<error descr="Expression with type 'void' not allowed as string template embedded expression">voidExpression()</error>}";
+    System.out.println(a);
+  }
+}
\ No newline at end of file