SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549


                                  FORM 8-K

                               CURRENT REPORT
                   PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934


       Date of report (Date of earliest event reported) May 22, 2001


                        DIAMOND BRANDS INCORPORATED
        -----------------------------------------------------------
             (Exact Name of Registrant as Specified in Charter)


        Minnesota                       333-58233            41-1565294
        ----------                   -----------------    -------------------
 (State or Other Jurisdiction         (Commission           (IRS Employer
     of Incorporation)                 File Number)        Identification No.)


1800 Cloquet Avenue, Cloquet, Minnesota                           55720
--------------------------------------------                     --------
(Address of Principal Executive Office)                         (Zip Code)


Registrant's telephone number, including area code  (218) 879-6700


                                    N/A
            ---------------------------------------------------
       (Former Name or Former Address, if Changed Since Last Report)



                        DIAMOND BRANDS INCORPORATED
                      Commission File Number 333-58233


ITEM 3. BANKRUPTCY OR RECEIVERSHIP

         On May 22, 2001, Diamond Brands Incorporated ("DBI") filed a
petition for relief under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code") for DBI and its subsidiaries with the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").

         A copy of the press release, dated May 23, 2001, is attached
hereto as Exhibit 2.1.



Exhibit
Number            Description
-------           -----------

2.1               Press Release relating to Chapter 11 filing.



                                 SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.



                                            DIAMOND BRANDS INCORPORATED

                                            Registrant


Date: June 5, 2001                          By:  /s/ William L. Olson
                                                 ----------------------------
                                            Name:  William L. Olson
                                            Title: Vice President of Finance



EXHIBIT 2.1

Diamond Brands Files to Restructure Under Chapter 11; Company has
Commitment for $8.2 Million in Post-Petition Financing

CLOQUET, Minn.- May 23, 2001--Diamond Brands announced today that in order
to implement the next phase of its restructuring process, it has filed
voluntary petitions under Chapter 11 of the Bankruptcy Code. Yesterday, the
Company announced it obtained a commitment for up to $8.2MM in debtor-in-
possession financing to fund the Company's operations during its voluntary
restructuring under Chapter 11. The financing, which is subject to Court
approval, is being provided by the Company's current senior lenders led by
Wells Fargo, as administrative agent.

         "After exploring all available alternatives, we believe that a
voluntary Chapter 11 proceeding presents the most effective means to
restructure our debt and our operations," said Chief Executive Officer
Naresh Nakra. "Chapter 11 allows us to continue to move forward with our
planned improvements in operations and merchandising and allows us to
achieve our restructuring objectives in an orderly, timely manner."

         "With the support of our vendors and the hard work of our
employees, we will be able to emerge from this process a stronger, more
competitive company," Mr. Nakra stated. "Looking ahead, the $8.2 Million
financing package we have arranged will provide the liquidity necessary to
fund our ongoing operations and enable the Company to purchase and pay for
goods and services."

         Diamond Brands said that while it completes its restructuring, the
Company's operations will continue to function as usual. The Company's
employees will continue to be paid without interruption, and it will
continue to pay for all new raw materials and product shipments from
vendors in the ordinary course of business. The Company said that it
expects its customer policies to remain unchanged, and is committed to
continue providing its customers with the best quality and highest customer
service as usual.

         Diamond Brands is a leading designer, manufacturer and marketer of
a broad range of consumer products including disposable plastic cutlery and
straws, matches, toothpicks, clothespins and wooden crafts. The Company
fimed its voluntary Chapter 11 petitions yesterday in the U.S. Bankruptcy
Court for the District of Delaware in Wilmington.

         This press release includes certain forward-looking statements in
reliance on the "safe harbor" provisions of The Private Securities
Litigation Reform Act of 1995. Any such forward-looking statements are
subject to a number of risks and uncertainties, including but not limited
to the factors identified below. Actual results may differ materially from
those anticipated in any such forward-looking statements. The Company
undertakes no obligation to update or revise any such forward-looking
statements.

         The Company's liquidity, capital resources, and results of
operations may be affected from time to time by a number of factors and
risks, including, but not limited to, the ability of the Company to execute
definitive DIP financing documents which are approved by the Bankruptcy
Court; the ability of the Company to operate successfully under a Chapter
11 proceeding; approval of plans and activities by the Bankruptcy Court;
risks associated with operating a business in Chapter 11; adverse
developments with respect to the Company's liquidity or results of
operations; the ability of the Company to obtain shipments and negotiate
terms with vendors and service providers for current orders; the ability to
develop, fund and execute a new operating plan for the Company; the ability
of the Company to attract and retain key executives and associates;
competitive pressures from other manufacturers, which may affect the nature
and viability of the Company's business strategy; trends in the economy as
a whole; the ability to maintain gross profit margins; the seasonal nature
of the Company's business and the ability of the Company to predict
consumer demand as a whole, as well as demand for specific goods; the
ability of the Company to attract and retain customers; costs associated
with the shipping, handling and control of inventory and the Company's
ability to optimize its supply chain; potential adverse publicity;
availability and cost of management and labor employed; real estate
occupancy and development costs.

CONTACT: Diamond Brands, Cloquet, Naresh Nakra, 952/543-6200,
nnakra@diamondbrands.com or Citigate Dewe Rogerson, Miami, Michelle
Palomino, 305/381-6500, michelle.palomino@citigatedr-mi.com.
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SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549

                                  FORM 8-K

                               CURRENT REPORT
                   PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

       Date of report (Date of earliest event reported) May 22, 2001

                        DIAMOND BRANDS INCORPORATED
        -----------------------------------------------------------
             (Exact Name of Registrant as Specified in Charter)

        Minnesota                       333-58233            41-1565294
        ----------                   -----------------    -------------------
 (State or Other Jurisdiction         (Commission           (IRS Employer
     of Incorporation)                 File Number)        Identification No.)

1800 Cloquet Avenue, Cloquet, Minnesota                           55720
--------------------------------------------                     --------
(Address of Principal Executive Office)                         (Zip Code)

Registrant's telephone number, including area code  (218) 879-6700

                                    N/A
            ---------------------------------------------------
       (Former Name or Former Address, if Changed Since Last Report)

                        DIAMOND BRANDS INCORPORATED
                      Commission File Number 333-58233

ITEM 3. BANKRUPTCY OR RECEIVERSHIP

         On May 22, 2001, Diamond Brands Incorporated ("DBI") filed a
petition for relief under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code") for DBI and its subsidiaries with the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").

         A copy of the press release, dated May 23, 2001, is attached
hereto as Exhibit 2.1.

Exhibit
Number            Description
-------           -----------

2.1               Press Release relating to Chapter 11 filing.

                                 SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

                                            DIAMOND BRANDS INCORPORATED

                                            Registrant

Date: June 5, 2001                          By:  /s/ William L. Olson
                                                 ----------------------------
                                            Name:  William L. Olson
                                            Title: Vice President of Finance

EXHIBIT 2.1

Diamond Brands Files to Restructure Under Chapter 11; Company has
Commitment for $8.2 Million in Post-Petition Financing

CLOQUET, Minn.- May 23, 2001--Diamond Brands announced today that in order
to implement the next phase of its restructuring process, it has filed
voluntary petitions under Chapter 11 of the Bankruptcy Code. Yesterday, the
Company announced it obtained a commitment for up to $8.2MM in debtor-in-
possession financing to fund the Company's operations during its voluntary
restructuring under Chapter 11. The financing, which is subject to Court
approval, is being provided by the Company's current senior lenders led by
Wells Fargo, as administrative agent.

         "After exploring all available alternatives, we believe that a
voluntary Chapter 11 proceeding presents the most effective means to
restructure our debt and our operations," said Chief Executive Officer
Naresh Nakra. "Chapter 11 allows us to continue to move forward with our
planned improvements in operations and merchandising and allows us to
achieve our restructuring objectives in an orderly, timely manner."

         "With the support of our vendors and the hard work of our
employees, we will be able to emerge from this process a stronger, more
competitive company," Mr. Nakra stated. "Looking ahead, the $8.2 Million
financing package we have arranged will provide the liquidity necessary to
fund our ongoing operations and enable the Company to purchase and pay for
goods and services."

         Diamond Brands said that while it completes its restructuring, the
Company's operations will continue to function as usual. The Company's
employees will continue to be paid without interruption, and it will
continue to pay for all new raw materials and product shipments from
vendors in the ordinary course of business. The Company said that it
expects its customer policies to remain unchanged, and is committed to
continue providing its customers with the best quality and highest customer
service as usual.

         Diamond Brands is a leading designer, manufacturer and marketer of
a broad range of consumer products including disposable plastic cutlery and
straws, matches, toothpicks, clothespins and wooden crafts. The Company
fimed its voluntary Chapter 11 petitions yesterday in the U.S. Bankruptcy
Court for the District of Delaware in Wilmington.

         This press release includes certain forward-looking statements in
reliance on the "safe harbor" provisions of The Private Securities
Litigation Reform Act of 1995. Any such forward-looking statements are
subject to a number of risks and uncertainties, including but not limited
to the factors identified below. Actual results may differ materially from
those anticipated in any such forward-looking statements. The Company
undertakes no obligation to update or revise any such forward-looking
statements.

         The Company's liquidity, capital resources, and results of
operations may be affected from time to time by a number of factors and
risks, including, but not limited to, the ability of the Company to execute
definitive DIP financing documents which are approved by the Bankruptcy
Court; the ability of the Company to operate successfully under a Chapter
11 proceeding; approval of plans and activities by the Bankruptcy Court;
risks associated with operating a business in Chapter 11; adverse
developments with respect to the Company's liquidity or results of
operations; the ability of the Company to obtain shipments and negotiate
terms with vendors and service providers for current orders; the ability to
develop, fund and execute a new operating plan for the Company; the ability
of the Company to attract and retain key executives and associates;
competitive pressures from other manufacturers, which may affect the nature
and viability of the Company's business strategy; trends in the economy as
a whole; the ability to maintain gross profit margins; the seasonal nature
of the Company's business and the ability of the Company to predict
consumer demand as a whole, as well as demand for specific goods; the
ability of the Company to attract and retain customers; costs associated
with the shipping, handling and control of inventory and the Company's
ability to optimize its supply chain; potential adverse publicity;
availability and cost of management and labor employed; real estate
occupancy and development costs.

CONTACT: Diamond Brands, Cloquet, Naresh Nakra, 952/543-6200,
nnakra@diamondbrands.com or Citigate Dewe Rogerson, Miami, Michelle
Palomino, 305/381-6500, michelle.palomino@citigatedr-mi.com.