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IMHO the first sed line deletes all the lines from $file where the line is empty (only contains a newline character) or is filled with spaces.
The next line sets the field variable to the first non...

If using 'sed ' is an option:
for i in *.WIP; do
echo $i
mv $i `echo $i | sed 's/\..*$//'`.ixf
done

Or if you want (GNU) awk, and assuming the 1st dot in the filename separates all the...