ONE of Darlington's best known taxi firms could be put out of business after running up thousands of pounds of debt.

Darlington borough councillors have also taken away Station Taxis' licence, further putting the company's future in jeopardy.

Bosses behind the firm and new business Direct Cars are expected to appeal to magistrates against the decision. The firm is allowed to operate until the appeal is heard.

A review of Station Taxis, based in Wards Yard, Albert Hill, Darlington, was heard by councillors on Wednesday.

It was accompanied by an application for Direct Cars, which wants to take over from Station Taxis.

The hearing came after liquidators were called in because Station Taxis owed £50,000 to Customs and Excise, £4,000 to Darlington Borough Council and £2,700 to a number of other creditors.

Michael Dunn, managing director of Station Taxis, had told the meeting the firm was owed £30,000.

They included various big firms in Darlington and other parts of the North-East. He said the firm picks up many clients from hospitals and airports.

He said: "Our clients don't use us because we are the cheapest. They use us because we provide them with a service and they want to keep with us."

Station Taxis, which has 28 cars, was established in 1981. A new firm was formed in 2005 after it went into voluntary liquidation with debts of more than £70,000.

As well as the financial status of the firm, councillors were concerned that many cars were being licensed in Berwick, Northumberland.

Julie Reeves, who had applied for a licence for Direct Cars, said: "I take the safety of my passengers very seriously.

"I have taken time to ensure there is no substandard in safety."

Bosses hoped both firms would be able to run side-by-side until Direct Cars full established.

Councillors revoked Station Taxis' application and refused the bid by Direct Cars.

The borough council's licensing committee chairwoman, Councillor Isobel Hartley, said of Station Taxis: "We consider there has been a material change. We are also very concerned that the company is providing a service that compromises the stringent measures set by Darlington Borough Council."

She said the committee was not satisfied that Direct Taxis was not a front for Station Taxis.

Nobody at either business was available for comment yesterday.