To make the meatballs, in a large bowl, combine the ground chicken, egg, bread crumbs, a large pinch of salt and pepper, garlic, red pepper flakes, and thyme. Form into 1-inch meatballs and set aside.
Set a large dutch oven over moderate heat. Once hot, add the bacon and cook until crispy. Use a slotted spoon to remove the bacon onto a plate lined with a paper towel.
Place the meatballs into the skillet with the bacon grease and cook until browned on all sides. They don't need to be fully cooked at this stage, just browning. Remove onto a plate and set aside.
Add the mushrooms to the pot and cook until browned. Deglaze the pan with cognac, scraping up the bottom browned bits. If you are feeling brave, you can ignite the cognac as soon as you add it to the pan by using a long match or lighter. Carefully light the booze on fire and shake the pan until the flames subside. Then stir in the red onion, chicken stock, tomato paste, garlic, thyme, and bay leaf. Season with a pinch of salt and pepper.
Return the meatballs to the pan along with the bacon, and pearl onions. Lower the flame and bring to a simmer. In a small bowl, stir together the flour and butter until smooth. Then add to the sauce, stirring to dissolve. Simmer on low until the sauce has thickened and the meatballs have fully cooked through. Garnish with parsley and serve with mashed potatoes. Enjoy!