Papier Wallcoverings & Interiors Inc., a retailer whose owners were prime movers behind a proposal to create a "design district" around North Avenue and Howard Street, has ceased operations at that location and filed for Chapter 11 bankruptcy protection.

The company plans to continue operating at its original location at 114 W. Padonia Road in Timonium, said Jerry Johnston, a financial consultant to Papier. He said Papier has been selling wallpaper and interior design items at that location for about 15 years and that "it was always successful."

Papier's decision to close its store in the Design Resource Center at 200 W. North Ave. throws the future of the project in doubt. Papier was the largest tenant of the project, and one of its principals, Gus Diakoulas, is general partner of the center.

Mr. Johnston said the North Avenue location turned out to be "too large for the operation." Mr. Diakoulas could not be reached for comment yesterday.

Papier's March 20 filing in federal bankruptcy court listed assets of $50,000 and liabilities of more than $1.1 million. Besides Gus Diakoulas, the petition lists John Diakoulas and Joyce Griffith as principals in the company. The largest creditor is First National Bank of Maryland, Mr. Johnston said.

Ms. Griffith said yesterday that Papier's filing was a result of problems at the design center, which was conceived as an one-stop shopping location to bring together architects, interior designers and the manufacturers who serve them.

She said the center was "a wonderful idea" that would have succeeded but for the troubled economy, which has wreaked havoc with designers and architects as commercial construction has ground to a halt.

"Quite a few of the tenants who moved in here didn't make it because they're all design-related."