Preheat oven to 425*
Butter the bottom and sides of a 10" baking dish.
Slice onions in half and then slice thinly.
In a large unheated skillet, combine the onions, butter, thyme, 3/4 teaspoon salt, 1/4 teaspoon pepper and a pinch of nutmeg. Cover pan and cook until the onions are soft, but not caramelized or brown, stirring occasionally, about 12 minutes.
Whisk the eggs in a medium-sized bowl with milk, cream, and remaining salt, pepper and nutmeg, until eggs are blended. Add chopped chives.
Spread the onions out in the buttered baking dish. Pour the egg mixture over the onions.
Bake until the top is deep golden brown and the custard is firm, about 30 minutes.
Let it sit for about 5 minutes to firm up. Serve warm.