Heat the olive oil in a large, heavy-based saucepan. Add the bacon and fry until crisp. Remove and blot with paper towels.
Add the shallots to the pan and saute for 5-7 mins until browned. from the pan and set aside with the bacon.
Pat the chicken pieces dry with paper towel. Add the remaining oil into the pan, then fry half the chicken pieces, turning regularly, for about 5 minutes or until browned. Repeat with the remaining chicken. Remove and set aside.
Add the garlic and saute for about 30 seconds, then, with the heat medium-high, pour in the brandy or sherry, stirring the bottom of the pan to deglaze and cook for about 3 minutes.
Return the chicken to the pan along with any juices, then pour in a little of the wine, stirring the bottom of the pan again. Add the stock, tomato paste, parsley, and bay leaves. Season with salt & pepper to taste, then return the bacon and shallots to the pan.
Cover, lower the heat to a simmer, and cook for an hour.
Just before serving, heat the oil for the mushrooms in a large non-stick frying pan. Add the mushrooms and fry over a high heat for a few mins until golden brown. Remove and set aside to keep warm.
Remove the chicken, shallots and bacon from the pan and transfer to a serving dish. Remove the bay leaves.
To make the thickener, mash the flour into olive oil and butter in a small bowl to form a paste. Bring the wine mixture to a gentle boil, then gradually drop in small pieces of the thickener, whisking each piece in using a wire whisk. Simmer for 2 mins. Add the mushrooms to the chicken, then pour over the thickened sauce.