Heat 1 tablespoon of oil in a large skillet over medium-high heat until hot.
Season the chicken pieces with 1/2 teaspoon salt, 1/4 teaspoon cracked pepper, 2 teaspoons Italian seasoning, 1/2 teaspoon garlic powder, 1/2 teaspoon onion powder, and 1/2 teaspoon paprika; toss to coat.
Add the seasoned chicken to the hot skillet and sear, stirring occasionally, until browned and cooked through, about 5–6 minutes; transfer to a plate and keep warm.
Add the remaining 1 tablespoon oil and 1 tablespoon butter to the same skillet over medium heat.
Add the sliced mushrooms and cook, stirring, until they begin to brown and soften, about 3–4 minutes.
Add the remaining 2 tablespoons butter (if using all butter at once) or the remaining butter if divided, then add the chopped shallot and chopped bell pepper and sauté until soft and fragrant, about 3 minutes.
Add the minced garlic and sauté until fragrant, about 30 seconds.
Return the cooked chicken and any accumulated juices to the skillet; stir to combine and cook 1–2 minutes more until everything is heated through and coated in the pan juices.
Taste and adjust seasoning with salt and pepper if desired, then sprinkle with chopped parsley and serve warm.
