The solid-state disproportionation of potassium benzoate to dipotassium terephthalate and benzene using zinc benzoate catalyst is conducted with the solid reagents dispersed as a slurry in liquid terphenyl diluent. The reactor effluent is water-quenched to obtain a liquid terphenyl phase, a water phase containing dissolved phthalates, and solid spent zinc oxide catalyst. The catalyst is separated by filtration, reslurried in terphenyl, reacted with benzoic acid to regenerate zinc benzoate, and the resultant catalyst slurry recycled to the reactor. The solids-free aqueous phase is contacted with benzoic acid to precipitate terephthalic acid crystals and form soluble potassium benzoate. The crystals are separated by filtration and recovered as a product of the process. The aqueous potassium benzoate solution is concentrated by evaporation and then contacted with hot terphenyl to produce a slurry of solid potassium benzoate in terphenyl for recycle to the reactor. Byproduct benzene is vented from the reactor and/or the effluent quench step.