Preheat oven to 350°F. Lightly coat a 9x13-inch baking dish with cooking spray and set aside.
Pat chicken dry with paper towels and season both sides with salt and pepper.
Heat 2 tablespoons olive oil in a large skillet over medium-high heat. Add chicken and brown for 5 minutes per side. Transfer to prepared baking dish.
Add butter to skillet. Once melted, add mushrooms and cook 2 minutes until golden. Transfer to baking dish with chicken.
Layer red bell pepper strips over chicken and mushrooms in the baking dish.
Add remaining 1 tablespoon olive oil to skillet with diced onion. Cook 5 minutes until tender.
In a bowl, whisk together chicken broth, ketchup, tomato paste, honey, white wine vinegar, Worcestershire sauce, smoked paprika, and chili powder.
Sprinkle flour over onions and cook 1 minute. Slowly stir in broth mixture and cook 3-4 minutes until slightly thickened.
Pour sauce over chicken in baking dish. Cover tightly with aluminum foil.
Bake 35-45 minutes, basting halfway through, until chicken reaches 165°F internally.
Remove foil, baste chicken with sauce, and bake uncovered 15 more minutes to caramelize peppers.
Let rest 5 minutes before serving. Spoon extra sauce over chicken.