UPDATE 1-Bottle makers Constar, Chesapeake file for Chap 11

(Adds Constar to story and re-writes throughout)

By Chelsea Emery

NEW YORK, Dec 30 (Reuters) - Plastic bottle maker Constar International Inc CNST.O filed for Chapter 11 bankruptcy protection on Tuesday, a day after box and bottle maker Chesapeake Corp CSKE.PK announced its own bankruptcy, as the companies seek to restructure crippling debt payments.

Constar, which makes plastic containers for food, soft drinks and water, said in a release that a bankruptcy filing would allow it to cut debt by $175 million and reduce its annual interest expense by $19.3 million. It plans to continue operations as usual.

On Monday, Chesapeake Corp, a maker of paperboard and plastic packaging, filed for Chapter 11 bankruptcy protection and said it plans to sell itself to a group of private equity firms after the slowing economy and aggressive competition made it impossible for it to keep up with interest payments on its debt. It also plans to continue business as usual.

The back-to-back filings illustrate how packaging companies, which have been struggling with falling demand and high costs, are now being pushed to the brink by the difficulty of arranging new credit terms.

The Dow Jones container and packaging index .DJUSCP, which tracks the performance of packaging maker stocks, has fallen 41 percent so far this year as investors worry high debt levels and falling demand will slam company profits.

Chesapeake, which makes folding cardboard boxes, leaflets and plastic beverage bottles, said in court filings it is "significantly levered" with almost $521 million in non-trade, interest-bearing debt. That debt required annual interest payments of more than $49 million.

The company said it no longer has access to borrowings or other capital and determined that it could no longer support its current level of debt. It has nearly 400 employees.