The finished UD-Shrug has ruches on the back, at the top (the bottom of the old cardigan). Fold over the fabric 2-3 times (depending on the length of the original cardigan) at one side of the back of the cardigan - about half way between the armhole and the centre back - and stitch in place. If you find the fabric too thick for your sewing mchine, you can hand stitch it.
