Sautee onions in olive oil on a medium high heat, let cook for about 5 minutes than add garlic and cook for another 2 minutes or until onions and translucent. Add can of mushrooms, red wine, basil and bay leaves. Let simmer for 5 minutes.
Mix cold water and gravy mix per instructions on package and add to pan. Add meatballs and let simmer until gravy thickens to lightly coat the back of a spoon. Serve with plain white rice or buttered noodles.