UNITED STATES
                      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): September 14, 2004


                        PACKAGING DYNAMICS CORPORATION
            (Exact Name of Registrant as Specified in its Charter)


      Delaware                       000-49741                 32-0009217
(State or Other Jurisdiction    (Commission File Number)     (IRS Employer
    of Incorporation)                                       Identification No.)


         3900 West 43rd Street, Chicago, Illinois                60632
       (Address of Principal Executive Offices)                (Zip Code)


                                (773) 843-4000
             (Registrant's telephone number, including area code)


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

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:

|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)

|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))

<PAGE>



Item 1.01      Entry Into a Material Agreement.

               The information set forth in Item 2.01 and Item 2.03 of this
Current Report on Form 8-K is incorporated by reference herein.


Item 2.01      Completion of Acquisition or Disposition of Assets.

               On September 14, 2004, the Company completed the previously
announced acquisition (the "Acquisition") of all of the issued and outstanding
shares of capital stock of 3141276 Canada Inc. ("Parent"), the parent company
of Papercon, Inc. ("Papercon"), pursuant to the acquisition agreement (the
"Acquisition Agreement") by and among the Company, Parent, GMG International
Inc., Papercon and Gaby A. Ajram, dated August 6, 2004. Papercon, a
manufacturer and marketer of a broad range of paper and foil based specialty
packaging products for foodservice, supermarket, quick service restaurant and
food processor customers, is headquartered at its Atlanta, Georgia
manufacturing facility and also has manufacturing facilities near Dallas,
Texas and Los Angeles, California.

               Packaging Dynamics acquired Papercon for the aggregate
consideration of approximately $67.9 million, net of cash balances acquired
and subject to adjustment, comprised of $44.8 million of cash paid at the
closing (net of cash balances acquired), a $7 million two year note (the
"Note"), 833,333 shares of Packaging Dynamics common stock, par value $0.01
per share (the "Common Stock"), valued at $12.4 million based upon the
September 13, 2004 closing price of $14.90 per share, and approximately $3.7
million representing the present value of amounts payable pursuant to a
non-competition agreement, dated September 14, 2004, between the Company and
Mr. Ajram (the "Non-Competition Agreement"). The purchase price is subject to
a downward adjustment to the extent that the net assets of Parent (on a
consolidated basis) are less than $33,500,000.

               The Non-Competition Agreement provides, among other things,
that for a period of ten (10) years following the closing of the Acquisition,
Mr. Ajram may not own, operate, manage, control, engage in, invest in or
participate in any manner in, act as a consultant or advisor to, or render
services for any other person or entity in any similar or competitive business
as Packaging Dynamics and its subsidiaries (including Papercon) anywhere in
the United States and Canada. Also, during this period, Mr. Ajram may not
without the prior written consent of the Company, solicit or advise any
customer or vender of the Company to patronize a competitive business or
curtail or withdraw their business with the Company or solicit for employment
any person employed by the Company. The Company is required to make twelve
(12) equal quarterly payments of $333,333 to Mr. Ajram under the
Non-Competition Agreement commencing in December 2004. The Company has the
right to set-off against its payment obligations under the Non-Competition
Agreement the full amount of any indemnification obligations required to be
paid by Mr. Ajram under the Acquisition Agreement. A failure by the Company to
make any payment under the Non-Competition Agreement that is not subject to a
claim for set-off, so long as Mr. Ajram has not breached the Non-Competition
Agreement, would constitute an event of default. Additionally, the failure to
pay any amount of principal or interest due under the Note would constitute a
cross-default under the Non-Competition Agreement. In the event of a default
and upon written notice of Mr. Ajram, the balance of consideration due under
the Non-Competition Agreement would become immediately due and payable and
would also accrue interest at a rate of 12% per year until such time as the
event of default is cured by the Company (or waived by Mr. Ajram) or all
amounts due are paid in full.

               In connection with the Acquisition, the Company and Mr. Ajram
entered into a registration rights agreement, dated September 14, 2004 (the
"Ajram Registration Rights Agreement"), between the Company, Mr. Ajram and
Packaging Investors, L.P. ("Packaging Investors"). The Company also amended
its existing registration rights agreement (the "Initial Registration Rights
Agreement") with, among others, Packaging Investors. Pursuant to the Ajram
Registration Rights Agreement, Mr. Ajram has the right, under certain
circumstances, to require the Company to register his shares of Common Stock
for sale in the public markets. Mr. Ajram also has piggyback registration
rights to include his shares in any registration statement which the Company
files on its own behalf (other than for employee benefit plans and business
acquisitions or corporate restructurings) or on behalf of other stockholders.
The Company amended the Initial Registration Rights Agreement to provide for
the piggyback registration rights granted to Mr. Ajram under the Ajram
Registration Rights Agreement. In addition, under the Ajram Registration
Rights Agreement, until the date on which Mr. Ajram ceases to own at least 5%
of the outstanding shares of Common Stock, at each annual meeting of
stockholders, the Company has agreed to nominate or cause to be nominated Mr.
Ajram for election to the board of directors of the Company. Mr. Ajram and
Packaging Investors have agreed that until the date (a) on which Packaging
Investors ceases to own at least 20% of the outstanding shares of Common
Stock, Mr. Ajram will vote any shares of Common Stock then owned by him to
nominate and elect the individual designated by Packaging Investors for
election to the board of directors of the Company and (b) on which Mr. Ajram
ceases to own at least 5% of the outstanding shares of Common Stock, Packaging
Investors will vote any shares of Common Stock then owned by it to nominate
and elect Mr. Ajram for election to the board of directors of the Company.

               Additionally, Papercon entered into a new lease (the "Lease")
with respect to its Atlanta headquarters and facilities, effective as of
September 14, 2004, with GHGA Properties, L.P. (the "Landlord"), a limited
partnership wholly-owned and controlled by Mr. Ajram. The initial term of the
Lease is five years and has options to renew for three additional five-year
terms. The rent for the initial and first renewal terms has been fixed with
the subsequent renewal terms to be set at the market rate as agreed upon by
the parties. The payment and performance of the obligations arising under the
Lease are guaranteed pursuant to a separate guaranty (the "Guaranty") by the
Company in favor of Landlord.

               Simultaneously with the closing of, and in connection with, the
Acquisition, the Company effected certain changes to its existing credit
facility (the "Senior Credit Facility") with Bank of America, N.A. ("BOA")
pursuant to that certain First Amendment to Credit Agreement (the "First
Amendment"), entered into as of August 6, 2004, among Packaging Dynamics
Operating Company (the "Borrower"), the Company, the domestic subsidiaries of
the Borrower, the lenders thereto and BOA in order to finance the cash
requirements of the Acquisition and ongoing corporate needs. The First
Amendment provides for an incremental $45 million tranche B term loan which
matures with the existing tranche B term loan in September 2009 and a $10
million expansion of the revolving credit facility to a total of $50 million.
See Item 2.03 of this Current Report on Form 8-K for additional information
regarding the First Amendment.

               Copies of the Acquisition Agreement, the Note, the
Non-Competition Agreement, the Ajram Registration Rights Agreement, the
amendment to the Initial Registration Rights Agreement, the Lease, the
Guaranty and the First Amendment are attached hereto as Exhibits 2.1, 10.1,
10.2, 10.3, 10.4, 10.5, 10.6 and 10.7, respectively. The descriptions of the
Acquisition Agreement, the Note, the Non-Competition Agreement, the Ajram
Registration Rights Agreement, the amendment to the Initial Registration
Rights Agreement, the Lease, the Guaranty and the First Amendment in this
Current Report on Form 8-K are qualified in their entirety by reference to the
complete copies of the agreements attached hereto as exhibits.


Item 2.03      Creation of a Direct Financial Obligation or an Obligation
               under an Off-Balance Sheet Arrangement of a Registrant.

               The information set forth in Item 2.01 of this Current Report
on Form 8-K with respect to the First Amendment is incorporated by reference
herein.

               As discussed in Item 2.01 above, the First Amendment effected
certain amendments to the Senior Credit Facility. The First Amendment provides
for an incremental $45 million tranche B term loan which matures with the
existing tranche B term loan in September 2009 and a $10 million expansion of
the revolving credit facility to a total of $50 million. The required
aggregate annual payments for the tranche B term loan, payable in equal
quarterly installments, have been amended to total $0.92 million in 2004,
$0.84 million in years 2005 through 2008, and $80.46 million in 2009.
Additionally, the First Amendment provides that the tranche A term loans and
revolving loans bear interest at rates of up to 2.0% plus the base rate, in
the case of the Base Rate Loans (as such term is defined in the Senior Credit
Facility), and up to 3.0% plus LIBOR, in the case of Eurodollar Loans (as such
term is defined in the Senior Credit Facility). The tranche B term loans bear
interest at rates of 2.0% plus the base rate, in the case of the Base Rate
Loans, and 3.0% plus LIBOR, in the case of Eurodollar Loans.

               The First Amendment provides that the Company is required to
comply on a quarterly basis with the following four financial covenants:

               o    under the leverage ratio covenant, as of the last day of
                    each fiscal quarter, the ratio of total funded debt of the
                    Company and its consolidated subsidiaries to consolidated
                    EBITDA of the Company and its consolidated subsidiaries
                    for the 12-month period then ended must not exceed
                    specified levels, decreasing at various intervals from 4.5
                    to 1 at September 30, 2004 to 4 to 1;

               o    under the senior secured leverage ratio covenant, as of
                    the last day of each fiscal quarter, the ratio of total
                    secured funded debt (other than subordinated debt) of the
                    Company and its consolidated subsidiaries to consolidated
                    EBITDA of the Company and its consolidated subsidiaries
                    for the 12-month period then ended must not exceed
                    specified levels, decreasing at various intervals from 4.0
                    to 1 at September 30, 2004 to 3 to 1;

               o    under the fixed charge coverage ratio covenant, as of the
                    last day of each fiscal quarter, for the 12-month period
                    then ended, the ratio of consolidated EBITDA less capital
                    expenditures and cash tax payments of the Company and its
                    consolidated subsidiaries to cash interest expense and
                    scheduled funded debt payments (other than certain seller
                    debt incurred in connection with the acquisition of
                    Papercon) of the Company and its consolidated subsidiaries
                    must be equal to or greater than certain levels increasing
                    at various intervals from 1.05 to 1 at September 30, 2004
                    to 1.2 to 1; and

               o    under the net worth covenant, Packaging Dynamics'
                    consolidated net worth as of the last day of each fiscal
                    quarter must be equal to or greater than 80% of the net
                    worth as of September 30, 2003 increased on a cumulative
                    basis by (1) as of the last day of each fiscal quarter,
                    50% of the consolidated net income of Packaging Dynamics
                    (to the extent positive) for the fiscal quarter then
                    ended, commencing with the fiscal quarter ended December
                    31, 2003, (2) 75% of the net cash proceeds from any equity
                    issuance by Packaging Dynamics or any subsidiary of
                    Packaging Dynamics and (3) 75% of the amount added to the
                    equity of Packaging Dynamics in connection with the
                    acquisition of Papercon.

               The First Amendment also provides that consolidated EBITDA,
calculated on a consolidated basis for Packaging Dynamics and its
subsidiaries, consists of (1) net income from continuing operations, excluding
the effect of any extraordinary or other non-recurring gains or losses or
non-cash gains or losses (in each case, other than in connection with the sale
and/or closure of the Detroit paper mill), plus (2) an amount which, in the
determination of net income, has been deducted for interest expense, taxes,
depreciation and amortization, non-cash expenses relating to the granting of
options to any employee or director of Packaging Dynamics or its subsidiaries,
certain cash and non-cash charges and/or losses with respect to the sale
and/or closure of the Detroit paper mill and charges related to the Papercon
owner bonus program as in effect for the periods prior to the closing of the
acquisition of Papercon, minus (3) cash expenditures related to non-cash
charges previously added back to net income in determining EBITDA (other than
in connection with the sale and/or closure of the Detroit paper mill), plus
(4) the write-off of capitalized financing costs existing as of the closing of
the Senior Credit Facility.

               As discussed in Item 2.01 of this Current Report on Form 8-K,
the Note was issued by the Company to Mr. Ajram in connection with the
Acquisition. The Note has a principal amount of $7,000,000 that is due and
payable two (2) years from the closing date of the Acquisition. The principal
amount payable under the Note will accrue interest at a rate of 5% per year,
which accrued interest will be due and payable in cash on a quarterly basis.
The Company has the right to set-off against its payment obligations under the
Note the full amount of any indemnification obligations required to be paid by
Mr. Ajram under the Acquisition Agreement. Events of default under the Note
would include the Company's failure to make any payment that is not subject to
a claim for set-off, a material breach of any of the Company's representations
and warranties under the Note that are not cured within 30 days of notice of
such breach and the bankruptcy or general insolvency of the Company. In
addition, a default by the Company under the Non-Competition Agreement would
constitute a cross-default under the Note. In the event of a default and upon
written notice of Mr. Ajram (except in the case of default due to the
bankruptcy or general insolvency of the Company, in which case written notice
is not required), the balance of consideration due under the Note would become
immediately due and payable and would also accrue interest at a rate of 12%
per year until such time as the event of default is cured by the Company (or
waived by Mr. Ajram) or all amounts due are paid in full.

               In connection with the Note, Mr. Ajram entered into an
intercreditor agreement with BOA pursuant to which payments under the Note are
subordinated to payments under the Company's credit facility, as amended.


Item 3.02      Unregistered Sales of Equity Securities.

               As described in Item 2.01 of this Current Report on Form 8-K,
the Company issued 833,333 shares of Common Stock to Mr. Ajram as part of the
consideration for the Acquisition. The shares of Common Stock that were issued
to Mr. Ajram were issued pursuant to an exemption from registration provided
by Section 4(2) of the Securities Act of 1933, as amended.


Item 5.02      Departure of Directors or Principal Officers; Election of
               Directors; Appointment of Principal Officers.

               On September 14, 2004, Frank V. Tannura was appointed Chief
Executive Officer of the Company and will remain the Company's Chairman. He
will serve as Chief Executive Officer at the pleasure of the board of
directors of the Company. Mr. Tannura, 47, has served as Chairman of the board
of directors of the Company since July 1, 2002, a director of the Company
since March 2002 and as a member of the Packaging Holdings, L.L.C. ("Packaging
Holdings"), the predecessor entity to Packaging Dynamics, management committee
since November 1998. Mr. Tannura served as a director of Ivex Packaging
Corporation ("Ivex"), a former controlling stockholder of the Company, from
August 1995 to June 2002, as an Executive Vice President and Chief Financial
Officer of Ivex from February 1999 to June 2002 and Vice President and Chief
Financial Officer from October 1989 to February 1999.

               On September 14, 2004, Phillip D. Harris was appointed
President and Chief Operating Officer of the Company and resigned from his
former position of Chief Executive Officer of the Company. He will serve as
Chief Operating Officer at the pleasure of the board of directors of the
Company. Mr. Harris, 61, has served as a director of the Company since March
2002. He has been President and Chief Executive Officer of the Company since
March 2002 and has held those offices with Packaging Holdings since January
2001. Prior to his employment with the Company, Mr. Harris was Vice President
of Operations of Fort James Corporation, a consumer product and tissue
manufacturer, from 1993 to 2001.

               On September 14, 2004, Henry C. Newell was appointed Vice
President, Operations of the Company and resigned from his former positions of
Chief Financial Officer and Secretary of the Company. He will serve as Vice
President, Operations at the pleasure of the board of directors of the
Company. Mr. Newell, 46, has served as Vice President and Chief Financial
Officer of the Company since January 2003. Prior to his employment with the
Company, Mr. Newell was Director, Project Management at Georgia Pacific
Corporation from 2001 to 2002 and held general management and controller
positions with Fort James Corporation from 1995 to 2001.

               On September 14, 2004, Patrick T. Chambliss was appointed Vice
President, Chief Financial Officer and Secretary of the Company. He will serve
as Vice President, Chief Financial Officer and Secretary at the pleasure of
the board of directors of the Company. Mr. Chambliss, 36, has served as a
consultant to the Company since 2003 and has received consulting fees in the
aggregate amount of $198,550. From 1997 to 2003, Mr. Chambliss was employed in
the investment banking division of Merrill Lynch & Co., most recently as Vice
President in the Mergers and Acquisitions group. Previously, Mr. Chambliss was
a manager in the transaction services and audit groups of
PricewaterhouseCoopers.


Item 9.01.     Financial Statements and Exhibits.

               (a) Financial Statements of Businesses Acquired.

               The Company will file the financial statements required by Item
9.01(a) of Form 8-K within the time period specified in Item 9.01(a)(4) of
Form 8-K.

               (b) Pro Forma Financial Information.

               The Company will file the financial statements required by Item
9.01(b) of Form 8-K within the time period specified in Item 9.01(b)(2) of
Form 8-K.

               (c) Exhibits.

Exhibit No.       Description
-----------       -----------

Exhibit 2.1*      Acquisition Agreement, dated August 6, 2004, among Packaging
                  Dynamics Corporation, 3141276 Canada Inc., GMG International
                  Inc., Papercon, Inc. and Gaby A. Ajram

Exhibit 10.1      Promissory Note issued by Packaging Dynamics Corporation to
                  Gaby A. Ajram, dated September 14, 2004

Exhibit 10.2      Non-Competition Agreement, dated September 14, 2004, between
                  Gaby A. Ajram and Packaging Dynamics Corporation

Exhibit 10.3      Registration Rights Agreement, dated September 14, 2004, by
                  and between Gaby A. Ajram, Packaging Dynamics Corporation
                  and Packaging Investors, L.P.

Exhibit 10.4      Amendment to the First Amended and Restated Registration
                  Rights Agreement by and among Packaging Investors, L.P.,
                  DCBS Investors, L.L.C., CB Investors, L.L.C., Thomas J. Wolf
                  and Packaging Dynamics Corporation

Exhibit 10.5*     Lease, dated September 14, 2004, by and between GHGA
                  Properties, L.P. and Papercon, Inc.

Exhibit 10.6      Guaranty of Packaging Dynamics Corporation, dated September
                  14, 2004, in the favor of GHGA Properties, L.P.

Exhibit 10.7*     First Amendment to Credit Agreement, dated August 6, 2004,
                  among Packaging Dynamics Operating Company, Packaging
                  Dynamics Corporation, each of the domestic subsidiaries of
                  Packaging Dynamics Operating Company, the lenders party
                  thereto and Bank of America, N.A.

*        Schedules and exhibits to these exhibits have been omitted, but will
be furnished to the Securities and Exchange Commission upon request.


<PAGE>


                                  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.


                                             PACKAGING DYNAMICS CORPORATION


Dated: September 20, 2004                    By: /s/ Patrick T. Chambliss
                                                 -----------------------------
                                                 Patrick T. Chambliss
                                                 Vice President and Chief
                                                 Financial Officer


<PAGE>



                                 EXHIBIT INDEX

Exhibit No.       Description
-----------       -----------

Exhibit 2.1*      Acquisition Agreement, dated August 6, 2004, among Packaging
                  Dynamics Corporation, 3141276 Canada Inc., GMG International
                  Inc., Papercon, Inc. and Gaby A. Ajram

Exhibit 10.1      Promissory Note issued by Packaging Dynamics Corporation to
                  Gaby A. Ajram, dated September 14, 2004

Exhibit 10.2      Non-Competition Agreement, dated September 14, 2004, between
                  Gaby A. Ajram and Packaging Dynamics Corporation

Exhibit 10.3      Registration Rights Agreement, dated September 14, 2004, by
                  and between Gaby A. Ajram, Packaging Dynamics Corporation
                  and Packaging Investors, L.P.

Exhibit 10.4      Amendment to the First Amended and Restated Registration
                  Rights Agreement by and among Packaging Investors, L.P.,
                  DCBS Investors, L.L.C., CB Investors, L.L.C., Thomas J. Wolf
                  and Packaging Dynamics Corporation

Exhibit 10.5*     Lease, dated September 14, 2004, by and between GHGA
                  Properties, L.P. and Papercon, Inc.

Exhibit 10.6      Guaranty of Packaging Dynamics Corporation, dated September
                  14, 2004, in the favor of GHGA Properties, L.P.

Exhibit 10.7*     First Amendment to Credit Agreement, dated August 6, 2004,
                  among Packaging Dynamics Operating Company, Packaging
                  Dynamics Corporation, each of the domestic subsidiaries of
                  Packaging Dynamics Operating Company, the lenders party
                  thereto and Bank of America, N.A.

*        Schedules and exhibits to these exhibits have been omitted, but will
be furnished to the Securities and Exchange Commission upon request.
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UNITED STATES
                      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): September 14, 2004

                        PACKAGING DYNAMICS CORPORATION
            (Exact Name of Registrant as Specified in its Charter)

      Delaware                       000-49741                 32-0009217
(State or Other Jurisdiction    (Commission File Number)     (IRS Employer
    of Incorporation)                                       Identification No.)

         3900 West 43rd Street, Chicago, Illinois                60632
       (Address of Principal Executive Offices)                (Zip Code)

                                (773) 843-4000
             (Registrant's telephone number, including area code)

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

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:

|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)

|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01      Entry Into a Material Agreement.

               The information set forth in Item 2.01 and Item 2.03 of this
Current Report on Form 8-K is incorporated by reference herein.

Item 2.01      Completion of Acquisition or Disposition of Assets.

               On September 14, 2004, the Company completed the previously
announced acquisition (the "Acquisition") of all of the issued and outstanding
shares of capital stock of 3141276 Canada Inc. ("Parent"), the parent company
of Papercon, Inc. ("Papercon"), pursuant to the acquisition agreement (the
"Acquisition Agreement") by and among the Company, Parent, GMG International
Inc., Papercon and Gaby A. Ajram, dated August 6, 2004. Papercon, a
manufacturer and marketer of a broad range of paper and foil based specialty
packaging products for foodservice, supermarket, quick service restaurant and
food processor customers, is headquartered at its Atlanta, Georgia
manufacturing facility and also has manufacturing facilities near Dallas,
Texas and Los Angeles, California.

               Packaging Dynamics acquired Papercon for the aggregate
consideration of approximately $67.9 million, net of cash balances acquired
and subject to adjustment, comprised of $44.8 million of cash paid at the
closing (net of cash balances acquired), a $7 million two year note (the
"Note"), 833,333 shares of Packaging Dynamics common stock, par value $0.01
per share (the "Common Stock"), valued at $12.4 million based upon the
September 13, 2004 closing price of $14.90 per share, and approximately $3.7
million representing the present value of amounts payable pursuant to a
non-competition agreement, dated September 14, 2004, between the Company and
Mr. Ajram (the "Non-Competition Agreement"). The purchase price is subject to
a downward adjustment to the extent that the net assets of Parent (on a
consolidated basis) are less than $33,500,000.

               The Non-Competition Agreement provides, among other things,
that for a period of ten (10) years following the closing of the Acquisition,
Mr. Ajram may not own, operate, manage, control, engage in, invest in or
participate in any manner in, act as a consultant or advisor to, or render
services for any other person or entity in any similar or competitive business
as Packaging Dynamics and its subsidiaries (including Papercon) anywhere in
the United States and Canada. Also, during this period, Mr. Ajram may not
without the prior written consent of the Company, solicit or advise any
customer or vender of the Company to patronize a competitive business or
curtail or withdraw their business with the Company or solicit for employment
any person employed by the Company. The Company is required to make twelve
(12) equal quarterly payments of $333,333 to Mr. Ajram under the
Non-Competition Agreement commencing in December 2004. The Company has the
right to set-off against its payment obligations under the Non-Competition
Agreement the full amount of any indemnification obligations required to be
paid by Mr. Ajram under the Acquisition Agreement. A failure by the Company to
make any payment under the Non-Competition Agreement that is not subject to a
claim for set-off, so long as Mr. Ajram has not breached the Non-Competition
Agreement, would constitute an event of default. Additionally, the failure to
pay any amount of principal or interest due under the Note would constitute a
cross-default under the Non-Competition Agreement. In the event of a default
and upon written notice of Mr. Ajram, the balance of consideration due under
the Non-Competition Agreement would become immediately due and payable and
would also accrue interest at a rate of 12% per year until such time as the
event of default is cured by the Company (or waived by Mr. Ajram) or all
amounts due are paid in full.

               In connection with the Acquisition, the Company and Mr. Ajram
entered into a registration rights agreement, dated September 14, 2004 (the
"Ajram Registration Rights Agreement"), between the Company, Mr. Ajram and
Packaging Investors, L.P. ("Packaging Investors"). The Company also amended
its existing registration rights agreement (the "Initial Registration Rights
Agreement") with, among others, Packaging Investors. Pursuant to the Ajram
Registration Rights Agreement, Mr. Ajram has the right, under certain
circumstances, to require the Company to register his shares of Common Stock
for sale in the public markets. Mr. Ajram also has piggyback registration
rights to include his shares in any registration statement which the Company
files on its own behalf (other than for employee benefit plans and business
acquisitions or corporate restructurings) or on behalf of other stockholders.
The Company amended the Initial Registration Rights Agreement to provide for
the piggyback registration rights granted to Mr. Ajram under the Ajram
Registration Rights Agreement. In addition, under the Ajram Registration
Rights Agreement, until the date on which Mr. Ajram ceases to own at least 5%
of the outstanding shares of Common Stock, at each annual meeting of
stockholders, the Company has agreed to nominate or cause to be nominated Mr.
Ajram for election to the board of directors of the Company. Mr. Ajram and
Packaging Investors have agreed that until the date (a) on which Packaging
Investors ceases to own at least 20% of the outstanding shares of Common
Stock, Mr. Ajram will vote any shares of Common Stock then owned by him to
nominate and elect the individual designated by Packaging Investors for
election to the board of directors of the Company and (b) on which Mr. Ajram
ceases to own at least 5% of the outstanding shares of Common Stock, Packaging
Investors will vote any shares of Common Stock then owned by it to nominate
and elect Mr. Ajram for election to the board of directors of the Company.

               Additionally, Papercon entered into a new lease (the "Lease")
with respect to its Atlanta headquarters and facilities, effective as of
September 14, 2004, with GHGA Properties, L.P. (the "Landlord"), a limited
partnership wholly-owned and controlled by Mr. Ajram. The initial term of the
Lease is five years and has options to renew for three additional five-year
terms. The rent for the initial and first renewal terms has been fixed with
the subsequent renewal terms to be set at the market rate as agreed upon by
the parties. The payment and performance of the obligations arising under the
Lease are guaranteed pursuant to a separate guaranty (the "Guaranty") by the
Company in favor of Landlord.

               Simultaneously with the closing of, and in connection with, the
Acquisition, the Company effected certain changes to its existing credit
facility (the "Senior Credit Facility") with Bank of America, N.A. ("BOA")
pursuant to that certain First Amendment to Credit Agreement (the "First
Amendment"), entered into as of August 6, 2004, among Packaging Dynamics
Operating Company (the "Borrower"), the Company, the domestic subsidiaries of
the Borrower, the lenders thereto and BOA in order to finance the cash
requirements of the Acquisition and ongoing corporate needs. The First
Amendment provides for an incremental $45 million tranche B term loan which
matures with the existing tranche B term loan in September 2009 and a $10
million expansion of the revolving credit facility to a total of $50 million.
See Item 2.03 of this Current Report on Form 8-K for additional information
regarding the First Amendment.

               Copies of the Acquisition Agreement, the Note, the
Non-Competition Agreement, the Ajram Registration Rights Agreement, the
amendment to the Initial Registration Rights Agreement, the Lease, the
Guaranty and the First Amendment are attached hereto as Exhibits 2.1, 10.1,
10.2, 10.3, 10.4, 10.5, 10.6 and 10.7, respectively. The descriptions of the
Acquisition Agreement, the Note, the Non-Competition Agreement, the Ajram
Registration Rights Agreement, the amendment to the Initial Registration
Rights Agreement, the Lease, the Guaranty and the First Amendment in this
Current Report on Form 8-K are qualified in their entirety by reference to the
complete copies of the agreements attached hereto as exhibits.

Item 2.03      Creation of a Direct Financial Obligation or an Obligation
               under an Off-Balance Sheet Arrangement of a Registrant.

               The information set forth in Item 2.01 of this Current Report
on Form 8-K with respect to the First Amendment is incorporated by reference
herein.

               As discussed in Item 2.01 above, the First Amendment effected
certain amendments to the Senior Credit Facility. The First Amendment provides
for an incremental $45 million tranche B term loan which matures with the
existing tranche B term loan in September 2009 and a $10 million expansion of
the revolving credit facility to a total of $50 million. The required
aggregate annual payments for the tranche B term loan, payable in equal
quarterly installments, have been amended to total $0.92 million in 2004,
$0.84 million in years 2005 through 2008, and $80.46 million in 2009.
Additionally, the First Amendment provides that the tranche A term loans and
revolving loans bear interest at rates of up to 2.0% plus the base rate, in
the case of the Base Rate Loans (as such term is defined in the Senior Credit
Facility), and up to 3.0% plus LIBOR, in the case of Eurodollar Loans (as such
term is defined in the Senior Credit Facility). The tranche B term loans bear
interest at rates of 2.0% plus the base rate, in the case of the Base Rate
Loans, and 3.0% plus LIBOR, in the case of Eurodollar Loans.

               The First Amendment provides that the Company is required to
comply on a quarterly basis with the following four financial covenants:

               o    under the leverage ratio covenant, as of the last day of
                    each fiscal quarter, the ratio of total funded debt of the
                    Company and its consolidated subsidiaries to consolidated
                    EBITDA of the Company and its consolidated subsidiaries
                    for the 12-month period then ended must not exceed
                    specified levels, decreasing at various intervals from 4.5
                    to 1 at September 30, 2004 to 4 to 1;

               o    under the senior secured leverage ratio covenant, as of
                    the last day of each fiscal quarter, the ratio of total
                    secured funded debt (other than subordinated debt) of the
                    Company and its consolidated subsidiaries to consolidated
                    EBITDA of the Company and its consolidated subsidiaries
                    for the 12-month period then ended must not exceed
                    specified levels, decreasing at various intervals from 4.0
                    to 1 at September 30, 2004 to 3 to 1;

               o    under the fixed charge coverage ratio covenant, as of the
                    last day of each fiscal quarter, for the 12-month period
                    then ended, the ratio of consolidated EBITDA less capital
                    expenditures and cash tax payments of the Company and its
                    consolidated subsidiaries to cash interest expense and
                    scheduled funded debt payments (other than certain seller
                    debt incurred in connection with the acquisition of
                    Papercon) of the Company and its consolidated subsidiaries
                    must be equal to or greater than certain levels increasing
                    at various intervals from 1.05 to 1 at September 30, 2004
                    to 1.2 to 1; and

               o    under the net worth covenant, Packaging Dynamics'
                    consolidated net worth as of the last day of each fiscal
                    quarter must be equal to or greater than 80% of the net
                    worth as of September 30, 2003 increased on a cumulative
                    basis by (1) as of the last day of each fiscal quarter,
                    50% of the consolidated net income of Packaging Dynamics
                    (to the extent positive) for the fiscal quarter then
                    ended, commencing with the fiscal quarter ended December
                    31, 2003, (2) 75% of the net cash proceeds from any equity
                    issuance by Packaging Dynamics or any subsidiary of
                    Packaging Dynamics and (3) 75% of the amount added to the
                    equity of Packaging Dynamics in connection with the
                    acquisition of Papercon.

               The First Amendment also provides that consolidated EBITDA,
calculated on a consolidated basis for Packaging Dynamics and its
subsidiaries, consists of (1) net income from continuing operations, excluding
the effect of any extraordinary or other non-recurring gains or losses or
non-cash gains or losses (in each case, other than in connection with the sale
and/or closure of the Detroit paper mill), plus (2) an amount which, in the
determination of net income, has been deducted for interest expense, taxes,
depreciation and amortization, non-cash expenses relating to the granting of
options to any employee or director of Packaging Dynamics or its subsidiaries,
certain cash and non-cash charges and/or losses with respect to the sale
and/or closure of the Detroit paper mill and charges related to the Papercon
owner bonus program as in effect for the periods prior to the closing of the
acquisition of Papercon, minus (3) cash expenditures related to non-cash
charges previously added back to net income in determining EBITDA (other than
in connection with the sale and/or closure of the Detroit paper mill), plus
(4) the write-off of capitalized financing costs existing as of the closing of
the Senior Credit Facility.

               As discussed in Item 2.01 of this Current Report on Form 8-K,
the Note was issued by the Company to Mr. Ajram in connection with the
Acquisition. The Note has a principal amount of $7,000,000 that is due and
payable two (2) years from the closing date of the Acquisition. The principal
amount payable under the Note will accrue interest at a rate of 5% per year,
which accrued interest will be due and payable in cash on a quarterly basis.
The Company has the right to set-off against its payment obligations under the
Note the full amount of any indemnification obligations required to be paid by
Mr. Ajram under the Acquisition Agreement. Events of default under the Note
would include the Company's failure to make any payment that is not subject to
a claim for set-off, a material breach of any of the Company's representations
and warranties under the Note that are not cured within 30 days of notice of
such breach and the bankruptcy or general insolvency of the Company. In
addition, a default by the Company under the Non-Competition Agreement would
constitute a cross-default under the Note. In the event of a default and upon
written notice of Mr. Ajram (except in the case of default due to the
bankruptcy or general insolvency of the Company, in which case written notice
is not required), the balance of consideration due under the Note would become
immediately due and payable and would also accrue interest at a rate of 12%
per year until such time as the event of default is cured by the Company (or
waived by Mr. Ajram) or all amounts due are paid in full.

               In connection with the Note, Mr. Ajram entered into an
intercreditor agreement with BOA pursuant to which payments under the Note are
subordinated to payments under the Company's credit facility, as amended.

Item 3.02      Unregistered Sales of Equity Securities.

               As described in Item 2.01 of this Current Report on Form 8-K,
the Company issued 833,333 shares of Common Stock to Mr. Ajram as part of the
consideration for the Acquisition. The shares of Common Stock that were issued
to Mr. Ajram were issued pursuant to an exemption from registration provided
by Section 4(2) of the Securities Act of 1933, as amended.

Item 5.02      Departure of Directors or Principal Officers; Election of
               Directors; Appointment of Principal Officers.

               On September 14, 2004, Frank V. Tannura was appointed Chief
Executive Officer of the Company and will remain the Company's Chairman. He
will serve as Chief Executive Officer at the pleasure of the board of
directors of the Company. Mr. Tannura, 47, has served as Chairman of the board
of directors of the Company since July 1, 2002, a director of the Company
since March 2002 and as a member of the Packaging Holdings, L.L.C. ("Packaging
Holdings"), the predecessor entity to Packaging Dynamics, management committee
since November 1998. Mr. Tannura served as a director of Ivex Packaging
Corporation ("Ivex"), a former controlling stockholder of the Company, from
August 1995 to June 2002, as an Executive Vice President and Chief Financial
Officer of Ivex from February 1999 to June 2002 and Vice President and Chief
Financial Officer from October 1989 to February 1999.

               On September 14, 2004, Phillip D. Harris was appointed
President and Chief Operating Officer of the Company and resigned from his
former position of Chief Executive Officer of the Company. He will serve as
Chief Operating Officer at the pleasure of the board of directors of the
Company. Mr. Harris, 61, has served as a director of the Company since March
2002. He has been President and Chief Executive Officer of the Company since
March 2002 and has held those offices with Packaging Holdings since January
2001. Prior to his employment with the Company, Mr. Harris was Vice President
of Operations of Fort James Corporation, a consumer product and tissue
manufacturer, from 1993 to 2001.

               On September 14, 2004, Henry C. Newell was appointed Vice
President, Operations of the Company and resigned from his former positions of
Chief Financial Officer and Secretary of the Company. He will serve as Vice
President, Operations at the pleasure of the board of directors of the
Company. Mr. Newell, 46, has served as Vice President and Chief Financial
Officer of the Company since January 2003. Prior to his employment with the
Company, Mr. Newell was Director, Project Management at Georgia Pacific
Corporation from 2001 to 2002 and held general management and controller
positions with Fort James Corporation from 1995 to 2001.

               On September 14, 2004, Patrick T. Chambliss was appointed Vice
President, Chief Financial Officer and Secretary of the Company. He will serve
as Vice President, Chief Financial Officer and Secretary at the pleasure of
the board of directors of the Company. Mr. Chambliss, 36, has served as a
consultant to the Company since 2003 and has received consulting fees in the
aggregate amount of $198,550. From 1997 to 2003, Mr. Chambliss was employed in
the investment banking division of Merrill Lynch & Co., most recently as Vice
President in the Mergers and Acquisitions group. Previously, Mr. Chambliss was
a manager in the transaction services and audit groups of
PricewaterhouseCoopers.

Item 9.01.     Financial Statements and Exhibits.

               (a) Financial Statements of Businesses Acquired.

               The Company will file the financial statements required by Item
9.01(a) of Form 8-K within the time period specified in Item 9.01(a)(4) of
Form 8-K.

               (b) Pro Forma Financial Information.

               The Company will file the financial statements required by Item
9.01(b) of Form 8-K within the time period specified in Item 9.01(b)(2) of
Form 8-K.

               (c) Exhibits.

Exhibit No.       Description
-----------       -----------

Exhibit 2.1*      Acquisition Agreement, dated August 6, 2004, among Packaging
                  Dynamics Corporation, 3141276 Canada Inc., GMG International
                  Inc., Papercon, Inc. and Gaby A. Ajram

Exhibit 10.1      Promissory Note issued by Packaging Dynamics Corporation to
                  Gaby A. Ajram, dated September 14, 2004

Exhibit 10.2      Non-Competition Agreement, dated September 14, 2004, between
                  Gaby A. Ajram and Packaging Dynamics Corporation

Exhibit 10.3      Registration Rights Agreement, dated September 14, 2004, by
                  and between Gaby A. Ajram, Packaging Dynamics Corporation
                  and Packaging Investors, L.P.

Exhibit 10.4      Amendment to the First Amended and Restated Registration
                  Rights Agreement by and among Packaging Investors, L.P.,
                  DCBS Investors, L.L.C., CB Investors, L.L.C., Thomas J. Wolf
                  and Packaging Dynamics Corporation

Exhibit 10.5*     Lease, dated September 14, 2004, by and between GHGA
                  Properties, L.P. and Papercon, Inc.

Exhibit 10.6      Guaranty of Packaging Dynamics Corporation, dated September
                  14, 2004, in the favor of GHGA Properties, L.P.

Exhibit 10.7*     First Amendment to Credit Agreement, dated August 6, 2004,
                  among Packaging Dynamics Operating Company, Packaging
                  Dynamics Corporation, each of the domestic subsidiaries of
                  Packaging Dynamics Operating Company, the lenders party
                  thereto and Bank of America, N.A.

*        Schedules and exhibits to these exhibits have been omitted, but will
be furnished to the Securities and Exchange Commission upon request.
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.

                                             PACKAGING DYNAMICS CORPORATION

Dated: September 20, 2004                    By: /s/ Patrick T. Chambliss
                                                 -----------------------------
                                                 Patrick T. Chambliss
                                                 Vice President and Chief
                                                 Financial Officer
EXHIBIT INDEX

Exhibit No.       Description
-----------       -----------

Exhibit 2.1*      Acquisition Agreement, dated August 6, 2004, among Packaging
                  Dynamics Corporation, 3141276 Canada Inc., GMG International
                  Inc., Papercon, Inc. and Gaby A. Ajram

Exhibit 10.1      Promissory Note issued by Packaging Dynamics Corporation to
                  Gaby A. Ajram, dated September 14, 2004

Exhibit 10.2      Non-Competition Agreement, dated September 14, 2004, between
                  Gaby A. Ajram and Packaging Dynamics Corporation

Exhibit 10.3      Registration Rights Agreement, dated September 14, 2004, by
                  and between Gaby A. Ajram, Packaging Dynamics Corporation
                  and Packaging Investors, L.P.

Exhibit 10.4      Amendment to the First Amended and Restated Registration
                  Rights Agreement by and among Packaging Investors, L.P.,
                  DCBS Investors, L.L.C., CB Investors, L.L.C., Thomas J. Wolf
                  and Packaging Dynamics Corporation

Exhibit 10.5*     Lease, dated September 14, 2004, by and between GHGA
                  Properties, L.P. and Papercon, Inc.

Exhibit 10.6      Guaranty of Packaging Dynamics Corporation, dated September
                  14, 2004, in the favor of GHGA Properties, L.P.

Exhibit 10.7*     First Amendment to Credit Agreement, dated August 6, 2004,
                  among Packaging Dynamics Operating Company, Packaging
                  Dynamics Corporation, each of the domestic subsidiaries of
                  Packaging Dynamics Operating Company, the lenders party
                  thereto and Bank of America, N.A.

*        Schedules and exhibits to these exhibits have been omitted, but will
be furnished to the Securities and Exchange Commission upon request.