New York’s Neue Galerie announced on Tuesday (27 September) that it had returned a painting looted by the Nazis to its rightful owners before purchasing it back from them at its current fair market value.

The Museum agreed to return Karl Schmidt-Rottluff’s ‘Nude’ (1914) to the heirs of a Jewish shoe manufacturer and Expressionist art collector after they approached the Museum a little over a year ago with a potential restitution claim. The repurchase price has not been revealed but other works by Schmidt-Rottluff’s have commanded over US$1million (approximately £768,357) in recent times.

‘Nude’ formed part of a collection of paintings belonging to Alfred and Tekla Hess and taken by the Nazis after the widowed Tekla was forced to flee Germany in 1939. The painting later resurfaced in 1994 at auction in Berlin where it sold for US$596,833 (£458,577). Five years later, the Neue Galerie purchased it from the same auction house for US$793,355 (£609,581).

General counsel for the Neue Galerie, Agnes Peresztegi, said there was no indication at the time of the 1999 sale that the painting has been looted by the Nazis. Subsequent research efforts by the Hess family and the Neue Galerie unveiled the truth behind its origins. “This case is an example of how provenance research has evolved and how much more we know today than we knew 20 years ago”, Ms Peresztegi said.

The agreement reached with the heirs of the Hess family reflects renewed research and restitution efforts by Neue Galerie co-founder Ronald S. Lauder. Mr Lauder, who is also the heir to the Estée Lauder cosmetics empire, has been criticised in the past for an absence of detailed provenance information on works in his Museum’s collection. While Mr Lauder has returned three artworks in his personal collection to their rightful owners the Hess settlement marks the first time a piece from the Museum has been restituted.

In a joint statement with the Museum, the Hess family commended the Neue Galerie’s “professional and transparent manner” in handling the matter. The Museum also plans to continue its research efforts with the assistance of Ms Peresztegi, an expert on Holocaust-era restitution claims. Mr Lauder has enlisted her help to undertake a review of the Museum’s holdings and clarify their provenance information.

I don’t see more restitutions right now in the pipeline, but it does not mean there will be nothing ever discovered,” Ms Peresztegi said.