Exhibit 99.1
                                                                    ------------
                   RECAPITALIZATION OF HANOVER DIRECT, INC.
                               SUMMARY OF TERMS

Chelsey Direct will transfer the entire issue of Series B Preferred shares
(including accrued dividends) to Hanover Direct, Inc. ("HNV") which shall issue
to Chelsey (i) shares of Series C Preferred Shares (on the terms set forth
below) with an aggregate liquidation preference equal to one-half (1/2) of the
accreted liquidation preference of the Series B Preferred Shares and the
closing date, and (ii) newly issued shares of Common Stock of HNV at the rate
of approximately 300% of its current market value (at the close on August 6,
2003) for the balance of the accreted liquidation preference.

Key Terms of Series C Preferred Shares:

Amount of Issue      That number of shares as will have an aggregate
                     liquidation preference equal to 1/2 of the accreted
                     liquidation preference of the Series B Preferred Shares
                     at the closing date.

Liquidation          $1.00 per share
Preference

Dividend             Commencing January 1, 2006 dividends shall be payable
                     quarterly at the rate of 6% per annum, with the preferred
                     dividend rate increasing at by 1 1/2% per annum on each
                     anniversary of the dividend commencement date until
                     redeemed.  At HNV's election, dividends may be paid in
                     kind at a rate equal to 1% higher than the applicable
                     cash dividend rate.

                     The Series C Preferred Shares will be entitled to
                     participate ratably with the Common Stock on a share for
                     share basis in any dividends or distributions paid to or
                     with respect to the Common Stock.  The right to
                     participate shall have anti-dilution protection.

Redemption           The Series C Preferred Shares may be redeemed in whole and
                     not in part, at the option of HNV at any time for the
                     liquidation preference and any accrued and unpaid dividends
                     (the "Redemption Price").  The Series C Preferred shares
                     shall be redeemed by the Company on January 1, 2009 (the
                     "Mandatory Redemption Date") for the Redemption Price.  If
                     the Series C Preferred Shares are not redeemed on or before
                     the Mandatory Redemption Date, the Series C Preferred
                     Shares shall be entitled to elect one half of the Company's
                     Board of Directors.

Voting               The Series C Preferred Shares shall be entitled to one vote
                     per share, and shall vote as a class with the Common Stock
                     on any matter submitted to a vote of the Common
                     Stockholders.  The Series C Preferred shares shall be
                     entitled to vote as a class on any matter that would
                     adversely affect the Series.



Covenants and       The Series C Preferred Shares shall have such additional
Rights              covenants and rights as are customary or necessary to give
                    effect to the foregoing.


Other material terms and conditions:

The agreements governing the transaction shall, among other things, provide for
a reconstitution of HNV's board to permit Chelsey to designate a majority of
directors, corporate governance guarantees to assure that there shall be
continuing directors of HNV who are not affiliated with Chelsey (who shall have
their own counsel and financial advisor at HNV's expense), the assent of the
unaffiliated directors shall be required for the approval of any transaction
with Chelsey (including, a determination of whether or not to redeem the Series
C Preferred shares), demand and piggy back registration rights with respect to
the resale by Chelsey of the shares of Common Stock owned by it, the
discontinuance, with prejudice, of the pending litigation, releases from
Chelsey to HNV and its officers and directors from claims of breach of
fiduciary duty, releases from HNV and its officers and directors from claims
against Chelsey.