Heat butter and oil in a large Dutch oven over medium heat. Add onion and chopped thyme; cook 10 minutes or until onion is tender, stirring frequently. Stir in broth and apples; cover and cook 30 minutes, stirring occasionally.
Add water, chestnuts, sherry, salt, and black pepper. Reduce heat to medium-low; simmer, uncovered, 10 minutes, stirring occasionally. Remove from heat; cool 5 minutes.
Place half of the apple mixture in a blender; process until smooth. Pour pureed bisque into a large bowl. Repeat procedure with remaining apple mixture. Return bisque to pan; cook over low heat 5 minutes or just until heated. Garnish with thyme leaves, if desired.