I’m afraid there’s no single German word to describe this feeling. The best I could come up with is “Scham über mögliche Fremdscham”. It could obviously be compounded into “Fremdschamesscham”, but the average German likely doesn’t understand that without additional context.

“Fremdscham” is what your old friend may be feeling. It’s a feeling of embarrassment on behalf of someone else. “Scham über mögliche Fremdscham” then translates to embarrassment at the potential feeling of your friend feeling embarrassed on your behalf.