Hang or arrange in folds (5)
I believe the answer is:
drape
I believe this clue is a double definition.
'hang' is the first definition.
(I've seen this in another clue)
'arrange in folds' is the second definition.
(I've seen this in another clue)
(Other definitions for drape that I've seen before include "Adorn loosely (with cloth)" , "Spread (cloth over)" , "Screen" , "Cover with a loose cloth" , "Hang - curtain" .)