The head of Copthall School is one of six Barnet heads who have threatened to quit if the council insists they make redundancies. The LEA has approved loans to struggling schools provided they outline a three-year recovery plan.
The problem is the plan would involve making redundancies at Christmas. Mrs Gadd would have to make 15 teachers redundant to make up a pound;250,000 deficit at her school in Mill Hill.
She said: "I am refusing to make those redundancies. I have said I will leave my job if I am forced to. I cannot run the school with fewer staff.
Losing people at Christmas is absurd because the timetable will be running at that time."
Mrs Gadd has already made savings through natural wastage. She has asked each of her 73 teachers to take on an extra lesson to cope with the loss of four teachers.
The borough's six worst-hit schools meet Barnet council on Monday to discuss alternative solutions. Barnet initially made nine teachers redundant but six of these were redeployed in the LEA and two took early retirement.
A council spokesman said: "There are no plans currently in place to make redundancies at Christmas but the situation may change as schools are still developing financial plans for the repayment of loans."