No. It will delete all lines no matter what is on them; not just lines not having the text you're looking for.
The use of any utility, for example x, will get rid of all data in file when you issue the command:

Code:

x < file > file

This will be done by the shell before xeven starts running.
Line 20 in your script:

Code:

for file in '$(ls -l $FOLDERDIR)'; do

sets $file to be a line of output from ls -l when it seems highly unlikely that you want an expansion of $file to be anything other than the file's name. Also, since line 11 of your script is:

Code:

cd $FOLDERDIR;

and you haven't changed directory between these two lines, I think you just want line 20 to be:

Code:

for file in '$(ls)'; do

You probably got lots of syntax errors from using $file instead of "$file" on lines 21 and 22. Even when $(ls) instead of $(ls -l), if any of your filenames contain characters that have meaning to the shell you're using, you need to use double-qoutes around $file. You should get into the habit of surrounding the expansion of any variable that may contain characters that the script itself did not produce. You never know when a user will try to hack your script by including characters that are special to the shell!