diff --git a/htlcswitch/link.go b/htlcswitch/link.go
index 254b56f8c..2dd7ce2c0 100644
--- a/htlcswitch/link.go
+++ b/htlcswitch/link.go
@@ -1936,69 +1936,11 @@ func (l *channelLink) handleUpstreamMsg(ctx context.Context,
 		}
 
 	case *lnwire.UpdateFailMalformedHTLC:
-		// Convert the failure type encoded within the HTLC fail
-		// message to the proper generic lnwire error code.
-		var failure lnwire.FailureMessage
-		switch msg.FailureCode {
-		case lnwire.CodeInvalidOnionVersion:
-			failure = &lnwire.FailInvalidOnionVersion{
-				OnionSHA256: msg.ShaOnionBlob,
-			}
-		case lnwire.CodeInvalidOnionHmac:
-			failure = &lnwire.FailInvalidOnionHmac{
-				OnionSHA256: msg.ShaOnionBlob,
-			}
-
-		case lnwire.CodeInvalidOnionKey:
-			failure = &lnwire.FailInvalidOnionKey{
-				OnionSHA256: msg.ShaOnionBlob,
-			}
-
-		// Handle malformed errors that are part of a blinded route.
-		// This case is slightly different, because we expect every
-		// relaying node in the blinded portion of the route to send
-		// malformed errors. If we're also a relaying node, we're
-		// likely going to switch this error out anyway for our own
-		// malformed error, but we handle the case here for
-		// completeness.
-		case lnwire.CodeInvalidBlinding:
-			failure = &lnwire.FailInvalidBlinding{
-				OnionSHA256: msg.ShaOnionBlob,
-			}
-
-		default:
-			l.log.Warnf("unexpected failure code received in "+
-				"UpdateFailMailformedHTLC: %v", msg.FailureCode)
-
-			// We don't just pass back the error we received from
-			// our successor. Otherwise we might report a failure
-			// that penalizes us more than needed. If the onion that
-			// we forwarded was correct, the node should have been
-			// able to send back its own failure. The node did not
-			// send back its own failure, so we assume there was a
-			// problem with the onion and report that back. We reuse
-			// the invalid onion key failure because there is no
-			// specific error for this case.
-			failure = &lnwire.FailInvalidOnionKey{
-				OnionSHA256: msg.ShaOnionBlob,
-			}
-		}
-
-		// With the error parsed, we'll convert the into it's opaque
-		// form.
-		var b bytes.Buffer
-		if err := lnwire.EncodeFailure(&b, failure, 0); err != nil {
-			l.log.Errorf("unable to encode malformed error: %v", err)
-			return
-		}
-
-		// If remote side have been unable to parse the onion blob we
-		// have sent to it, than we should transform the malformed HTLC
-		// message to the usual HTLC fail message.
-		err := l.channel.ReceiveFailHTLC(msg.ID, b.Bytes())
+		err := l.processRemoteUpdateFailMalformedHTLC(msg)
 		if err != nil {
-			l.failf(LinkFailureError{code: ErrInvalidUpdate},
-				"unable to handle upstream fail HTLC: %v", err)
+			l.log.Errorf("failed to process remote fail "+
+				"malformed: %v", err)
+
 			return
 		}
 
@@ -4671,3 +4613,74 @@ func (l *channelLink) processRemoteUpdateFulfillHTLC(
 
 	return nil
 }
+
+// processRemoteUpdateFailMalformedHTLC takes an `UpdateFailMalformedHTLC` msg
+// sent from the remote and processes it.
+func (l *channelLink) processRemoteUpdateFailMalformedHTLC(
+	msg *lnwire.UpdateFailMalformedHTLC) error {
+
+	// Convert the failure type encoded within the HTLC fail message to the
+	// proper generic lnwire error code.
+	var failure lnwire.FailureMessage
+	switch msg.FailureCode {
+	case lnwire.CodeInvalidOnionVersion:
+		failure = &lnwire.FailInvalidOnionVersion{
+			OnionSHA256: msg.ShaOnionBlob,
+		}
+	case lnwire.CodeInvalidOnionHmac:
+		failure = &lnwire.FailInvalidOnionHmac{
+			OnionSHA256: msg.ShaOnionBlob,
+		}
+
+	case lnwire.CodeInvalidOnionKey:
+		failure = &lnwire.FailInvalidOnionKey{
+			OnionSHA256: msg.ShaOnionBlob,
+		}
+
+	// Handle malformed errors that are part of a blinded route. This case
+	// is slightly different, because we expect every relaying node in the
+	// blinded portion of the route to send malformed errors. If we're also
+	// a relaying node, we're likely going to switch this error out anyway
+	// for our own malformed error, but we handle the case here for
+	// completeness.
+	case lnwire.CodeInvalidBlinding:
+		failure = &lnwire.FailInvalidBlinding{
+			OnionSHA256: msg.ShaOnionBlob,
+		}
+
+	default:
+		l.log.Warnf("unexpected failure code received in "+
+			"UpdateFailMailformedHTLC: %v", msg.FailureCode)
+
+		// We don't just pass back the error we received from our
+		// successor. Otherwise we might report a failure that penalizes
+		// us more than needed. If the onion that we forwarded was
+		// correct, the node should have been able to send back its own
+		// failure. The node did not send back its own failure, so we
+		// assume there was a problem with the onion and report that
+		// back. We reuse the invalid onion key failure because there is
+		// no specific error for this case.
+		failure = &lnwire.FailInvalidOnionKey{
+			OnionSHA256: msg.ShaOnionBlob,
+		}
+	}
+
+	// With the error parsed, we'll convert the into it's opaque form.
+	var b bytes.Buffer
+	if err := lnwire.EncodeFailure(&b, failure, 0); err != nil {
+		return fmt.Errorf("unable to encode malformed error: %w", err)
+	}
+
+	// If remote side have been unable to parse the onion blob we have sent
+	// to it, than we should transform the malformed HTLC message to the
+	// usual HTLC fail message.
+	err := l.channel.ReceiveFailHTLC(msg.ID, b.Bytes())
+	if err != nil {
+		l.failf(LinkFailureError{code: ErrInvalidUpdate},
+			"unable to handle upstream fail HTLC: %v", err)
+
+		return err
+	}
+
+	return nil
+}