Convert the M2TS to MKV, using MKVMerge but since the chapter data is in the mpls (playlist) it won’t have chapters. There’s a tool in MMH to create chapters in an MKV you need to enter each chapter start time, once the chapters are in the MKV it’s business as usual.
MMH has MKVMerge in its programs folder. Command line to convert is:
”c:\program files ((x86)\music media helper\mkvmerge.exe” -o output.mkv input.m2ts
You need double quotes if file names or folder names have spaces
EDIT: Adding Chapters to MKV in MMH:
https://reva.blob.core.windows.net/mmh4/Music Media Helper Documentation.pdf#page30