1. Melt 1/4 cup butter in Dutch oven over medium heat. Saute bacon and onion until transparent, about 5 minutes. Remove bacon and onion with slotted spoon and reserve.
2. Add chicken and brown on all sides in remaining fat. Sprinkle with flour. Add brandy, wine, bay leaf, thyme, parsley, salt, pepper and nutmeg.
3. Cover and bake at 350 degrees for 40 minutes. Skim and discard fat. Stir in reserved onion, bacon and mushrooms. Cover and return to oven.
4. Bake 5 to 10 minutes more. Stir remaining butter into sauce.