JVM backend error on nested generic ADT

[pthariensflame]

The following code causes backend errors on the marked lines:

shared class Measured<Type, out Measure>() {}

shared final class FingerTree<out Measure, Element> {
    class Node<out Elem>(shared Measure val, shared Elem[2]|Elem[3] elems)
            given Elem satisfies Object {}

    class Digit<out Elem>(shared Elem[1]|Elem[2]|Elem[3]|Elem[4] elems)
            given Elem satisfies Object {}

    abstract class Tree<out Elem>() of Empty | Single<Elem> | Deep<Elem>
            given Elem satisfies Object {}
    final class Empty() extends Tree<Nothing>() {} // error
    final class Single<out Elem>(shared Elem elem) extends Tree<Elem>() // error
            given Elem satisfies Object {}
    final class Deep<out Elem>( // error
        shared Measure val,
        shared Digit<Elem> left,
        shared Tree<Node<Elem>> middle,
        shared Digit<Elem> right
    ) extends Tree<Elem>()
            given Elem satisfies Object {}

    shared Measured<Element,Measure> localMeasured;
    Tree<Element> tree;

    shared new empty(Measured<Element,Measure> measured) {
        localMeasured = measured;
        tree = Empty();
    }
}

The error in question is identical on all three lines, and it is:

Unexpected type
 required: class or interface without bounds
 found:    ? extends Elem

@gavinking said on https://gitter.im/ceylon/user that this was a compiler bug, and asked me to report it here.

[pthariensflame]

Here is a minimal example of the bug:

class A() {
    abstract class B<out X>() of C<X> {}
    class C<out X>() extends B<X>() {} // error
}

Changing out to in in both places produces a similar-looking backend error, with ? extends X swapped for ? super X. Oddly enough, removing the variance annotation entirely also eliminates the backend error.