The Sky Sports pundit pulled no punches regarding Celtic's defeat.
The Hoops' bid to reach the group stages of the Champions League for the first time in two years hit a snag last night by losing the first leg of their second-round qualifier.
The Red Imps are a semi-professional side whose hero on the night - Lee Casciaro, who scored the 48th-minute winner - is a full-time military policeman.
It was a hugely embarrassing defeat despite Brendan Rodgers's attempts to play it down, given it was Celtic's first competitive outing under the Northern Irishman, who replaced Ronny Deila earlier this summer.
But the former Celtic striker was failed to see reason to play it down, describing the defeat as perhaps the worst in the history of Scottish football and hit out at the former Liverpool manager for trying to sugercoat the result.
"It's probably up there [as one of the worst results in Scottish history]," Nicholas told Sky Sports News. "I'm trying to get my head around it.
"I was really disappointed with Brendan's comment last night. I watched 15 minutes of the first half and I thought: 'This doesn't look good at all, it doesn't look like a Brendan Rodgers team.'
"He has to take his responsibility, it's going to take him time to get this right, but it was a loss that was severely embarrassing, it's as embarrassing as it gets.
"You get bad days at the office, but last night was absolutely shocking to watch. Brendan is probably flying back to Glasgow today and thinking: 'My goodness, I didn't realise we had stooped this low.'"
Celtic, who welcome the Red Imps to Glasgow next Wednesday for the second leg, will feel confident in turning it around and going through, but this has been a major wake-up call.