Hang on... my bad :( Copying my profile to beta also corrupts things. This probably has something to do with settings and is unrelated to driver itself.

horzadome@, In order to further triage this issue could you please perform the below steps  
1. goto Wrench->Settings
2. At the bottom of the page click on 'Show advanced settings…' 
3. Scroll down the page again until you find the System heading, below which is an option to 'Use hardware acceleration when available'.
4. If the check box is not ticked, please tick on it and restart the browser.

After this could you open "chrome://gpu" in browser and let us know your observations.

This was showing enabled the whole time.
However, deleting "Local State" file fixed the issue for me.

horzadome@ : Thanks for the update, can you please confirm if we can close the issue.

As per comment #4 closing this issue, Please raise a new issue if you come across the similar one on latest chrome version.

Thanks!

I've seen a very funny behavior where the GPU process failed to start and running chrome *once* with --single-process appears to have fixed it. 

$ lsb_release -a
Distributor ID:	LinuxMint
Description:	Linux Mint 18.1 Serena
Release:	18.1
Codename:	serena

$ uname -a
Linux hal 4.4.0-57-generic #78-Ubuntu SMP Fri Dec 9 23:50:32 UTC 2016 x86_64 x86_64 x86_64 GNU/Linux

$ modinfo nouveau
filename:       /lib/modules/4.4.0-57-generic/kernel/drivers/gpu/drm/nouveau/nouveau.ko
license:        GPL and additional rights
description:    nVidia Riva/TNT/GeForce/Quadro/Tesla
author:         Nouveau Project
srcversion:     EC92A4D3DAC91500A127A5C
alias:          pci:v000012D2d*sv*sd*bc03sc*i*
alias:          pci:v000010DEd*sv*sd*bc03sc*i*
depends:        drm,drm_kms_helper,ttm,mxm-wmi,wmi,video,i2c-algo-bit
intree:         Y
vermagic:       4.4.0-57-generic SMP mod_unload modversions 
parm:           tv_norm:Default TV norm.
		Supported: PAL, PAL-M, PAL-N, PAL-Nc, NTSC-M, NTSC-J,
			hd480i, hd480p, hd576i, hd576p, hd720p, hd1080i.
		Default: PAL
		*NOTE* Ignored for cards with external TV encoders. (charp)
parm:           vram_pushbuf:Create DMA push buffers in VRAM (int)
parm:           nofbaccel:Disable fbcon acceleration (int)
parm:           tv_disable:Disable TV-out detection (int)
parm:           ignorelid:Ignore ACPI lid status (int)
parm:           duallink:Allow dual-link TMDS (default: enabled) (int)
parm:           pstate:enable sysfs pstate file, which will be moved in the future (int)
parm:           config:option string to pass to driver core (charp)
parm:           debug:debug string to pass to driver core (charp)
parm:           noaccel:disable kernel/abi16 acceleration (int)
parm:           modeset:enable driver (default: auto, 0 = disabled, 1 = enabled, 2 = headless) (int)
parm:           runpm:disable (0), force enable (1), optimus only default (-1) (int)


chrome://gpu with --single-process flag : gpu-single-process.txt

chrome://gpu without --single-process flag *afterwards* : gpu-normal.txt

Unfortunately I can no longer show you the output of the case where the GPU process fails to start since I hadn't saved that...

Deleted: gpu-single-process.txt 8.9 KB

gpu-single-process.txt 8.9 KB View Download

Deleted: gpu-normal.txt 8.2 KB

gpu-normal.txt 8.2 KB View Download

I think I found the issue! I had another chromium profile that was suffering from the same issue and the same fix worked. The root cause of the issue I believe is that I switched from the proprietary Nvidia driver to the nouveau driver since the profile was created. However the chromium GPU configuration is still for the Nvidia driver and hence the GPU process is failing to start.

As before, the fix is running chromium with the --single-process flag once.

chrome://gpu *before* running with --single-process flag: chromium-before.txt
chrome://gpu *after* running with --single-process flag: chromium-after.txt

Deleted: chromium-before.txt 4.9 KB

chromium-before.txt 4.9 KB View Download

Deleted: chromium-after.txt 9.0 KB

chromium-after.txt 9.0 KB View Download

Since this issue is closed as wontfix, should I be opening a new issue?