man ps has all the answers, under the "PROCESS STATE CODES" heading:

The CTRL-\ key sends a kill signal to the foreground job which, under normal circumstances, is guaranteed to terminate it. This signal cannot be captured by a process. However, this means the process cannot cleanup and is just summarily stopped. In some cases, a process can be stuck in a kernel wait state so this signal never reaches it. In that case, the process is unusable but cannot be killed.

To accomplish this, after starting the children (loop.sh) in the background, call wait, and upon receipt of the INT signal, kill the process group whose PGID equals your PID.