function custom_loop() {

    global $paged;
    $args = array('post_type' => 'PostType');

$parentCatID = '114';
$childCats = get_categories( 'child_of='.$parentCatID );
if(is_array($childCats)):
foreach($childCats as $child){ ?>
<h2><?php echo $child->name; ?></h2>
<?php query_posts('cat='.$child->term_id);
while(have_posts()): the_post(); $do_not_duplicate = $post->ID; ?>
<!-- POST CODE -->
<div class="post">
 <?php if(has_post_thumbnail()) : ?>
 <?php
    $thumbnail_id=get_the_post_thumbnail($post->ID);
    preg_match ('/src="(.*)" class/',$thumbnail_id,$link);
    $str = get_bloginfo('stylesheet_directory') . '/timthumb/timthumb.php?src=' . $link[1] . '&h=90&w=146&zc=1';
 ?>
 <a class="test" href="<?php the_permalink(); ?>" rel="bookmark" title="Permanent Link to <?php the_title(); ?>">
 <img src="<?php echo $str ?>"   />
 </a>
<h3><?php echo the_title(); ?></h3>
<?php endif; ?>
</div>
<!-- END POST CODE -->
<?php
endwhile;
echo '<br style="clear:both;" />';
wp_reset_query();
}
endif;

}