<PAGE>
 
                                                                     Exhibit 3.1

                               RESTATED BYLAWS OF

                                CROWN PAPER CO.

                        (as amended September 11, 1998)



                      ARTICLE I - MEETING OF STOCKHOLDERS



     Section 1.1  Place and Time of Meetings.  Meetings of stockholders shall be
                  --------------------------                                    
held at such place, either within or without the Commonwealth of Virginia, and
at such time, as may be provided in the notice of the meeting.


     Section 1.2  Organization and Order of Business.  The Chairman (the
                  ----------------------------------                    
"Chairman") or, in his absence, the Chief Executive Officer or a Vice President,
shall serve as chairman at all meetings of the stockholders.  The Secretary of
the Corporation, or, in his absence, an Assistant Secretary, shall act as
secretary at all meetings of the stockholders.  In the event that neither the
Secretary nor any Assistant Secretary is present, the chairman of the meeting
may appoint any person to act as secretary of the meeting.

     The Chairman shall have the authority to make such rules and regulations,
to establish such procedures and to take such steps as he may deem necessary or
desirable for the proper conduct of each meeting of the stockholders, including,
without limitation, the authority to make the agenda and to establish procedures
for (i) dismissing of business not properly presented, (ii) maintaining of order
and safety, (iii) placing limitations on the time allotted to questions or
comments on the affairs of the Corporation, (iv) placing restrictions on
attendance at a meeting by persons or classes of persons who are not
stockholders or their proxies, (v) restricting entry to a meeting after the time
prescribed for the commencement thereof and (vi) commencing, conducting and
closing voting on any matter.

     Section 1.3  Annual Meeting.  The annual meeting of stockholders shall be
                  --------------                                              
held on the second Thursday in April of each year, if not a legal holiday, and
if a legal holiday, then on the next succeeding business day.

     Section 1.4  Substitute Annual Meeting.  If an annual meeting of
                  -------------------------                          
stockholders is not held on the day designated in these Bylaws, a substitute
annual meeting shall be called as promptly as is practicable by the Chief
Executive Officer or the Board of Directors.  Any meeting so called shall be
designated and treated for all purposes as the annual meeting.

     Section 1.5  Special Meetings.  Special meetings of the stockholders may be
                  ----------------                                              
called only by the Chief Executive Officer or the Board of Directors.  Only
business within the purpose or purposes described in the notice for a special
meeting of stockholders may be conducted at the meeting.
<PAGE>
 
     Section 1.6   Record Dates.  The record date for determining stockholders
                   ------------                                               
entitled to demand a special meeting of stockholders is the date the first
stockholder signs the demand that the meeting be held.

     Except as is provided in the preceding paragraph, the Board of Directors
may fix, in advance, a record date to make a determination of stockholders
entitled to notice of, or to vote at, any meeting of stockholders, to receive
any dividend or for any purpose, such date to be not more than 70 days before
the meeting or action requiring a determination of stockholders.  If no such
record date is set the record date shall be the close of business on the day
before the date on which the first notice is given.

     Section 1.7  Notice Of Meetings.  Written notice stating the place, day and
                  ------------------                                            
hour of each meeting of stockholders and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given not less
than ten nor more than 60 days before the date of the meeting (except when a
different time is required in these Bylaws or by law) either personally or by
mail, telephone, telegraph, teletype, telecopy or other form of wire or wireless
communication, or by private courier, to each stockholder of record entitled to
vote at such meeting.  If mailed, such notice shall be deemed to be effective
when deposited in first class United States mail with postage thereon prepaid,
addressed to the stockholder at his address as it appears on the share transfer
books of the Corporation.  If given in any other manner, such notice shall be
deemed effective when (i) given personally or by telephone, (ii) sent by
telegraph, teletype, telecopy or other form of wire or wireless communication or
(iii) given to a private courier to be delivered.

     Notice of a stockholder's meeting to act on (i) an amendment of the
Articles of Incorporation; (ii) a plan of merger or share exchange; (iii) the
sale, lease, exchange or other disposition of all or substantially all the
property of the Corporation otherwise than in the usual and regular course of
business, or (iv) the dissolution of the Corporation, shall be given, in the
manner provided above, not less than 25 nor more than 60 days before the date of
the meeting.  Any notice given pursuant to this section shall state that the
purpose, or one of the purposes, of the meeting is to consider such action and
shall be accompanied by (x) a copy of the proposed amendment, (y) a copy of the
proposed plan of merger or share exchange, or (z) a summary of the agreement
pursuant to which the proposed transaction will be effected.  If only a summary
of the agreement is sent to the stockholders, the Corporation shall also send a
copy of the agreement to any stockholder who requests it.

     If a meeting is adjourned to a different date, time or place, notice need
not be given if the new date, time or place is announced at the meeting before
adjournment.  However, if a new record date for an adjournment meeting is fixed,
notice of the adjourned meeting shall be given to stockholders as of the new
record date, unless a court provides otherwise.

     Section 1.8  Waiver of Notice; Attendance at Meeting.  A stockholder may
                  ---------------------------------------                    
waive any notice required by law, the Articles of Incorporation or these Bylaws
before or after the date and time of the meeting that is the subject of such
notice.  The waiver shall be in writing, be signed 

                                       2
<PAGE>
 
by the stockholder entitled to the notice, and be delivered to the Secretary
of the Corporation for inclusion in the minutes or filing with the corporate
records.

     A stockholder's attendance at a meeting (i) waives objection to lack of
notice or defective notice of the meeting, unless the stockholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting, and (ii) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the stockholder objects to considering the matter
when it is presented.

     Section 1.9  Quorum and Voting Requirements.  Unless otherwise required by
                  ------------------------------                               
law, a majority of the votes entitled to be cast on a matter constitutes a
quorum for action on that matter.  Once a share is represented for any purpose
at a meeting, it is deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting unless a new record date is or
shall be set for that adjourned meeting.  If a quorum exists, action on a
matter, other than the election of directors, is approved if the votes cast
favoring the action exceed the votes cast opposing the action, unless a greater
number of affirmative votes is required by law.  Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present.  Less than a quorum may adjourn a meeting.

     Section 1.10  Action Without Meeting.  Action required or permitted to be
                   ----------------------                                     
taken at a meeting of stockholders may be taken without a meeting and without
action by the Board of Directors if the action is taken by all the stockholders
entitled to vote on the action.  The action shall be evidenced by one or more
written consents describing the action taken, signed by all the stockholders
entitled to vote on the action, and delivered to the Secretary of the
Corporation for inclusion in the minutes or filing with the corporate records.
Action taken by unanimous written consent shall be effective according to its
terms when all consents are in the possession of the Corporation, unless the
consent specifies a different effective date, in which event specified therein,
provided the consent states the date of execution by each stockholder.  A
stockholder may withdraw a consent only by delivering a written notice of
withdrawal to the Corporation prior to the time that all consents are in the
possession of the Corporation.

     If not otherwise fixed pursuant to the provisions of Section 1.6 the record
date for determining stockholders entitled to take action without a meeting is
the date the first stockholder signs the consent described in the preceding
paragraph.



                             ARTICLE II - DIRECTORS

     Section 2.1  General Powers.  The Corporation shall have a Board of
                  --------------                                        
Directors.  All corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation managed under the direction
of, its Board of Directors, subject to any limitation set forth in the Articles
of Incorporation.

                                       3
<PAGE>
 
     Section 2.2  Number and Term.  The number of directors of the Corporation
                  ---------------                                             
shall be eight.  This number may be changed from time to time by amendment to
these Bylaws to increase or decrease by 30 percent or less the number of
directors last elected by the stockholders, but only the stockholders may
increase or decrease the number by more than 30 percent.  No decrease in number
shall have the effect of shortening the term of any incumbent director.  Each
director shall hold office until his death, resignation or removal or until his
successor is elected.

     Section 2.3  Election.  Except as provided in Section 2.4, the directors
                  --------                                                   
(other than initial directors) shall be elected by the holders of the Common
shares at each annual meeting of stockholders and those persons who receive the
greatest number of votes shall be deemed elected even though they do not receive
a majority of the votes cast.  No individual shall be name or elected as a
director without his prior consent.

     Section 2.4  Removal; Vacancies.  The stockholders may remove one or more
                  ------------------                                          
directors with or without cause.  If a director is elected by a voting group,
only the stockholders of that voting group may elect to remove him.  Unless the
Articles of Incorporation require a greater vote, a director may be removed if
the number of votes cast to remove him constitutes a majority of the votes
entitled to be cast at an election of directors of the voting group or voting
groups by which such director was elected.  A director may be removed by the
stockholders only at a meeting called for the purpose of removing him and the
meeting notice must state that the purpose, or one of the purposes of the
meeting, is removal of the director.

     A vacancy on the Board of Directors, including a vacancy resulting from the
removal of a director or an increase in the number of directors, may be filled
by (i) the stockholders, (ii) the Board of Directors or (iii) the affirmative
vote of a majority of the remaining directors though less than a quorum of the
Board of Directors, and may, in the case of a resignation that will become
effective at a specified later date, be filled before the vacancy occurs but the
new director may not take office until the vacancy occurs.

     Section 2.5  Annual and Regular Meetings.  An annual meeting of the Board
                  ---------------------------                                 
of Directors, which shall be considered a regular meeting, shall be held
immediately following each annual meeting of stockholders, for the purpose of
electing officers and carrying on such other business as may properly come
before the meeting.  The Board of Directors may also adopt a schedule of
additional meetings, which shall be considered regular meetings.  Regular
meetings shall be held at such times and at such places, within or without the
Commonwealth of Virginia, as the Chief Executive Officer or the Board of
Directors shall designated from time to time.  If no place is designated,
regular meetings shall be held at the principal office of the Corporation.

     Section 2.6  Special Meetings.  Special meetings of the Board of Directors
                  ----------------                                             
may be called by the Chief Executive Officer or a majority of the Directors of
the Corporation, and shall be held at such times and at such places, within or
without the Commonwealth of Virginia, as the person or persons calling the
meetings shall designate.  If no such place is designed in the notice of a
meeting, it shall be held at the principal office of the Corporation.

                                       4
<PAGE>
 
     Section 2.7  Notice of Meetings.  No notice need be given of regular
                  ------------------                                     
meetings of the Board of Directors.

     Notices of special meetings of the Board of Directors shall be given to
each director in person or delivered to this residence or business address (or
such other place as he may have directed in writing) not less than twenty-four
(24) hours before the meeting by mail, messenger, telecopy, telegraph, or other
means of written communication or by telephoning such notice to him.  Any such
notice shall set forth the time and place of the meeting and state the purpose
for which it is called.

     Section 2.8  Waiver of Notice; Attendance at Meeting.  A director may waive
                  ---------------------------------------                       
any notice required by law, the Articles of Incorporation, or these Bylaws
before or after the date and time stated in the notice, and such waiver shall be
equivalent to the giving of such notice.  Except as provided in the next
paragraph of this section, the waiver shall be in writing, signed by the
director entitled to the notice and filed with the minutes or corporate records.

     A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting promptly upon his arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for assent to
action taken at the meeting.

     Section 2.9  Quorum; Voting.  A majority of the number of directors fixed
                  --------------                                              
in these Bylaws shall constitute a quorum for the transaction of business at a
meeting of the Board of Directors.  If a quorum is present when a vote is taken,
the affirmative vote of a majority of the directors present is the act of the
Board of Directors.  A director who is present at a meeting of the Board of
Directors or a committee of the Board of Directors when corporate action is
taken is deemed to have assented to the action taken unless (i) he objects at
the beginning of the meeting, or promptly upon his arrival, to holding it or
transacting specified business at the meeting; or (ii) he votes against, or
abstains from, the action taken.

     Section 2.10  Telephone Meetings.  The Board of Directors may permit any or
                   ------------------                                           
all directors to participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting.  A director
participating in a meeting by this means is deemed to be present in person at
the meeting.

     Section 2.11  Action Without Meeting.  Action required or permitted to be
                   ----------------------                                     
taken at a meeting of the Board of Directors may be taken without a meeting if
the action is taken by all members or the Board.  The action shall be evidenced
by one or more written consents stating the action taken, signed by each
director either before or after the action taken, and included in the minutes or
filed with the corporate records reflecting the action taken.  Action taken
under this section shall be effective when the last director signs the consent
unless the consent specifies a different effective date in which event the
action taken is effective as of the date specified therein provided the consent
states the date of execution by each director.

                                       5
<PAGE>
 
                     ARTICLE III - COMMITTEES OF DIRECTORS


     Section 3.1  Committees.  The Board of Directors may create one or more
                  ----------                                                
committees and appoint members of the Board of Directors to serve on them.
Unless otherwise provided in these Bylaws, each committee shall have two or more
members who serve at the pleasure of the Board of Directors.  The creation of a
committee and appointment of members to it shall be approved by a majority of
all of the directors in office when the action is taken.


     Section 3.2  Authority of Committees.  To the extent specified by the Board
                  -----------------------                                       
of Directors, each committee may exercise the authority of the Board of
Directors, except that a committee may not (i) approve or recommend to
stockholders action that is required by law to be approved by stockholders; (ii)
fill vacancies on the Board of Directors or on any of its committees; (iii)
amend the Articles of Incorporation; (iv) adopt, amend, or repeal these Bylaws;
(v) approve a plan of merger not requiring stockholder approval; (vi) authorize
or approve a distribution, except according to a general formula or method
prescribed by the Board of Directors; or (vii) authorize or approve the issuance
or sale or contract for sale, of stock or determine the designation and relative
rights, preferences, and limitations of a class or series of stock, except that
the Board of Directors may authorize a committee, or a senior executive officer
of the Corporation, to do so within limits specifically prescribed by the Board
of Directors.

     Section 3.3  Executive Committee.  The Board of Directors shall appoint an
                  -------------------                                          
Executive Committee consisting of two or more directors, which committee shall
have all of the authority of the Board of Directors except to the extent such
authority is limited by the provisions of Section 3.2.

     Section 3.4  Committee Meetings; Miscellaneous.  The provisions of these
                  ---------------------------------                          
Bylaws which govern meetings, action without meetings, notice and waiver of
notice, and quorum and voting requirements of the Board of Directors shall apply
to committees of directors and their members as well.



                             ARTICLE IV - OFFICERS


     Section 4.1  Officers.  The officers of the Corporation shall be a
                  --------                                             
Chairman; a President and Chief Executive Officer; a Secretary; a Chief
Financial Officer; and such additional officers, including Vice Presidents and
other officers, as the Board of Directors may deem necessary or advisable to
conduct the business of the Corporation.  The Chief Executive Officer shall be a
member of the Board of Directors.  The Board of Directors shall also designate
those officers who are deemed to be "Executive Officers." Any two offices may be
combined except the offices of President and Secretary.


     Section 4.2  Election; Term.  Officers shall be elected at each annual
                  --------------                                           
meeting of the Board of Directors and shall hold office, unless removed, until
the next annual meeting of the 

                                       6
<PAGE>
 
Board of Directors or until their successors are elected. Any officer may
resign at any time upon written notice to the Board of Directors.

     Section 4.3  Removal of Officers.  Officer may be removed, with or without
                  -------------------                                          
cause, at any time by the Board of Directors.

     Section 4.4.1  Duties of the Chairman.  The Chairman shall perform such
                    ----------------------                                  
duties, from time to time, as may be assigned to him or her by the Board of
Directors.  Unless he or she declines to serve, the Chairman shall preside at
all meetings of the stockholders and the Board of Directors.

     Section 4.4.2  Duties of the President and Chief Executive Officer.  The
                    ---------------------------------------------------      
President and Chief Executive Officer shall have general charge of, and be
charged with, the duty of supervision of the business of the Corporation.  In
addition, he or she shall perform such duties, from time to time, as may be
assigned to him or her by the Board of Directors.

     Section 4.5  Duties of the Secretary.  The Secretary shall have the duty to
                  -----------------------                                       
see that a record of the proceedings of each meeting of the stockholders and the
Board of Directors, and any committee of the Board of Directors, is properly
recorded and that notices of all such meetings are duly given in accordance with
the provisions of these Bylaws or as required by law; he or she may affix the
corporate seal to any document the execution of which is duly authorized, and
when so affixed may attest the same; and, in general, he or she shall perform
all duties incident to the office of secretary of a corporation, and such other
duties as, from time to time, may be assigned to him or her by the Chief
Executive Officer or the Board of Directors, or as may be required by law.

     Section 4.6  Duties of the Chief Financial Officer.  The Chief Financial
                  -------------------------------------                      
Officer shall have charge of and be responsible for all securities, funds,
receipts and disbursements of the Corporation, and shall deposit or cause to be
deposited, in the name of the Corporation, all monies or valuable effects in
such banks, trust companies or other depositories as shall, from time to time,
be selected by or under authority granted by the Board of Directors; he or she
shall be custodian of the financial records of the Corporation; he or she shall
keep or cause to be kept full and accurate records of all receipts and
disbursements of the Corporation and shall render to the Chief Executive Officer
and the Board of Directors, whenever requested, an account of the financial
condition of the Corporation; and shall perform such duties as may be assigned
to him or her by the Chief Executive Officer or the Board of Directors.

     Section 4.7  Duties of Other Officers.  The other officers of the
                  ------------------------                            
Corporation shall have such authority and perform such duties as shall be
prescribed by the Board of Directors or by officers authorized to appoint them
to their respective offices.  To the extent that such duties are not so stated,
such officers shall have such authority and perform the duties that generally
pertain to their respective offices, subject to the control of the Chief
Executive Officer or the Board of Directors.

                                       7
<PAGE>
 
     Section 4.8  Voting Securities of Other Corporations.  Any one of the Chief
                  ---------------------------------------                       
Executive Officer or Chief Financial Officer shall have the power to act for and
vote on behalf of the Corporation at all meetings of the stockholders of any
corporation in which this Corporation holds stock, or in connection with any
consent of stockholders in lieu of any such meeting.

     Section 4.9  Bonds.  The Board of Directors may require that any or all
                  -----                                                     
officers, employees and agents of the Corporation give bond to the Corporation,
with sufficient sureties, conditioned upon the faithful performance of the
duties of their respective offices or positions.



                         ARTICLE V - STOCK CERTIFICATES


     Section 5.1  Form.  Stock of the Corporation shall, when fully paid, be
                  ----                                                      
evidenced by certificates containing such information as is required by law and
approved by the Board of Directors.  Certificates shall be signed by the Chief
Executive Officer and the Secretary and may (but need not) be sealed with the
seal of the Corporation.  The seal of the Corporation and any or all of the
signatures on such certificate may be facsimile.  If any officer who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer before such certificate is issued it may be issued by
the Corporation with the same effect as if he were such officer on the date of
issue.


     Section 5.2  Transfer.  The Board of Directors may make rules and
                  --------                                            
regulations concerning the issue, registration and transfer of certificates
representing the stock of the Corporation.  Transfers of stock and of the
certificates representing such stock shall be made upon the books of the
Corporation by surrender of the certificates representing such stock accompanied
by written assignments given by the owners or their attorneys-in-fact.

     Section 5.3  Restrictions on Transfer.  A lawful restriction on the
                  ------------------------                              
transfer or registration of transfer of stock is valid and enforceable against
the holder or a transferee of the holder if the restriction complies with the
requirements of law and its existence is noted conspicuously on the front or
back of the certificate representing the stock.  Unless so noted a restriction
is not enforceable against a person without knowledge of the restriction.

     Section 5.4  Lost or Destroyed Stock Certificates.  The Corporation may
                  ------------------------------------                      
issue a new stock certificate in the place of any certificate theretofore issued
which is alleged to have been lost or destroyed and may require the owner of
such certificate, or his legal representative, to give the Corporation a bond,
with or without surety, or such other agreement, undertaking or security as the
Board of Directors shall determine is appropriate, to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss or
destruction or the issuance of any such new certificate.

                                       8
<PAGE>
 
                     ARTICLE VI - MISCELLANEOUS PROVISIONS


     Section 6.1  Corporate Seal.  The corporate seal of the Corporation shall
                  --------------                                              
be circular and shall have inscribed thereon, within and around the
circumference "CROWN PAPER CO." In the center shall be the word "SEAL".


     Section 6.2  Fiscal Year.  The fiscal year of the Corporation shall be
                  -----------                                              
determined in the discretion of the Board of Directors, but in the absence of
any such determination it shall be the fiscal year ending on the last Sunday in
December each year.

     Section 6.3  Amendments.  These Bylaws may be amended or repealed, and new
                  ----------                                                   
Bylaws may be made, at any regular or special meeting of the Board of Directors.
Bylaws made by the Board of Directors may be repealed or changed and new Bylaws
may be made by the stockholders, and the stockholders may prescribe that any
Bylaw made by them shall not be altered, amended or repealed by the Board of
Directors.

                                       9